Monday, May 28, 2007

On gasoline "price-gouging" laws

I wanted to hold back from commenting on the idiocy of this latest gasoline price gouging legislation I'd heard about until I got a little more feedback and information.

My first reaction upon hearing of this ill-conceived exercise in demagoguery was a lack of surprise, combined with a head-shaking disgust regarding the undefined nature of the supposed crime.

Assuming that our wise and omniscient politicians were able to "correct" the alleged flaws in the pricing of this commodity, how would they go about identifying the so-called gougers?

Is there a reasonable and logical definition of price gouging as described in the House of Representatives' legislation? The answer, unsurprisingly, is no, there is not.

Here's a taste of what the politicians have cooked up, in their latest attempt to save us all:

The gouging bill would prohibit the sale of gasoline or other refined petroleum products at ``unconscionably excessive'' prices or prices that take ``unfair advantage'' of consumers during a presidentially declared ``energy emergency.

The Federal Trade Commission would be able to issue civil penalties of up to three times the amount of profits or $3 million for those that violate the law. Companies would face criminal fines of up to $150 million, and individuals could be fined $2 million and face up to 10 years in jail.

``I don't know what 'unconscionably excessive' means,'' Representative Joe Barton, a Texas Republican, said during debate this morning over the measure. ``It's not defined in statute. As far as I can tell it's not been defined in any case law. Apparently it's going to be determined on a case-by-case basis.''

Splendid. I'll leave it to intelligent readers to guess how that will work out.

But since it's Memorial Day, and you might still be harboring some illusions that this latest piece of advocacy legislation will help you out, here's a little dose of reality for you. Please see the Financial Sense Newshour's May 26 segment on energy with guest expert, Richard Loomis of World Energy Monthly Review (right at the 20 minute mark of the broadcast).

See also, The Wall Street Journal's Monday editorial, "Pains at the Pump", and the Mises blog's recent editorial, "The Giant Gas-Gouging Gaffe".