Price gouging legislation a bad idea
Americans held a referendum on gasoline prices this Memorial Day weekend and voted by driving out of town in record numbers. Their verdict on prices running $3.10 a gallon and higher: They don’t like them but they can live with them as long as gas is readily available.
That should prompt the Senate when it returns from its own holiday to reject a truly bad idea sent its way by the House. This bill seeks to dampen gas prices by criminalizing “price gouging.”
Price gouging tends to be in the eye of the beholder. People can’t define it but are confident that they know it when they see it, which is why trying to regulate price gouging makes for bad law.
And the House bill is filled with nebulous phrasing – “unconscionably excessive,” “unfair advantage,” “gross disparity.”
Basically, it’s price gouging if an attorney can convince a judge that it is.
And if the president should invoke this emergency power, the trial lawyers will come flocking.
The bill contains penalties of up to $150 million for companies and up to $10 million and 10 years in jail for individuals.
One way to keep prices down is to encourage new entrants into the market. Some small operators might even tear out their pumps rather than risk jail and financial ruin for a pricing mistake.
It’s only human to believe that bad things happen – high gas prices, for example – because bad people sat down in secret and planned it that way.
But since the Arab oil embargo of 1973, the Federal Trade Commission and the Department of Energy have investigated – more than 30 times, by one count – high gasoline prices and have never found any evidence of collusion, manipulation or price fixing.
The culprit always turns out to be supply and demand, aggravated by such factors as hurricanes, refinery fires, market misjudgments and Congress’ own often-counterproductive efforts to steer the industry in directions it deems desirable.
The price-gouging bill is a backdoor attempt at price controls, which inevitably fail and inevitably hurt consumers in the process.
The public can always vote on prices with their cars.