Price gouging bills continue to roll forward
So called “price gouging” bills (H.R. 1252 and S. 357) as regularly covered by NPN are working their way through both the House and Senate and could seriously impact petroleum distribution and sales throughout the United States.
The penalties are extreme, and the language was somewhat unclear in earlier versions as to exactly what would constitute price gouging. While such bills are undesirable and ultimately unnecessary in a free market structure with the level of transparency found petroleum retailing, at least some of the worst fears of the industry are being addressed. The following is the text of a letter from the National Association of Convenience Stores (NACS) evaluating U.S. House bill H.R. 1252, the Federal Price Gouging Prevention Act, sponsored by Bart Stupak (D-Mich.) The letter was sent to House members on May 22. The House on May 23 approved the bill by a vote 284 to 141 in the face of a veto threat from President Bush.
May 22, 2007
Revised Price Gouging Bill Represents a Significant Improvement
Dear Representative:
This afternoon, NACS received a revised version of H.R. 1252, the Federal Price Gouging Prevention Act. On behalf of the more than 2,200 retail member companies of the National Association of Convenience Stores, I write to express our appreciation for the authors’ efforts to provide additional clarity to the legislation and to improve the ability of retailers to respond to market forces within the law. The amendment being circulated represents a significant improvement over H.R. 1252 as introduced.
Although retailers remain concerned with the excessive penalties provided for by this legislation, NACS believes that changes in this version will provide much needed clarity for retailers.
Specifically, by providing for an emergency proclamation issued by the President to define the geographic area and time period of applicability, and by requiring that a price both be considered “unconscionably excessive” and “indicate the seller is taking advantage” of the emergency situation, the legislation now clearly addresses unscrupulous market activity during a period within which consumers may be susceptible to actual price gouging.
The revisions further provide additional “Factors Considered” when determining whether price gouging has occurred. NACS appreciates the recognition by Congress of the various market factors which affect retailer pricing decisions. While we have only had a brief opportunity to analyze the bill, we consider the revised language a significant improvement because it:
- Provides for accurate comparison with the competitive market by directing prosecutors to consider whether a price charged represents a gross disparity with the price charged before the proclamation and whether the price charged grossly exceeds that charged by the seller’s competitors.
- Enables retailers to respond to actual market conditions by ensuring that prosecutors must consider whether a price charged reasonably reflects additional costs incurred or reasonably anticipated to be incurred and whether a price charged was substantially attributable to local, regional, national or international market conditions.
NACS appreciates the efforts made to address retailer concerns and looks forward to working with Congress as this legislation continues through the legislative process.
Sincerely,
John Eichberger
Vice President, Government Relations
On the Senate front, similar price gouging language can be found in S. 357 sponsored by Sen. Dianne Feinstein (D-Calif.). The legislation has currently passed out of the Senate Committee on Commerce, Science & Transportation to the Senate floor for debate.
The National Petrochemical & Refiners Association (Washington) expressed its concerns to the Senate Committee on Commerce, Science & Transportation over the decision to attach the price gouging language to a bill addressing corporate average fuel economy standards.
“Legislation that attempts to curtail the activity of free markets will inevitably harm consumers,” said NPRA Executive Vice President Charles T. Drevna. “During times of emergency and supply disruption, rising prices play an important role in limiting economic harm. They signal suppliers to increase production and bring fuel to affected areas while at the same time encouraging consumers to conserve.”
Drevna emphasized his concern regarding price-gouging legislation, “such legislation runs counter to the findings of innumerable studies that price fluctuations in transportation fuel markets reflect myriad factors including the price of crude oil, available refining capacity, and demand—not 'price gouging' or improper pricing practices.”
On the broader front, S. 357, the Ten-in-Ten Fuel Economy Act, would revise corporate average fuel economy standards to achieve a nationwide fleet average of 35 miles per gallon by the year 2020 and then continue to improve fuel economy by four percent per year for the next ten years. The bill also would create, for the first time, fuel economy standards for medium-duty and heavy-duty trucks, and would provide the Secretary of Transportation expanded authority to prescribe and enforce fuel economy standards.
“There have been significant discussions about the proper approach to increasing fuel economy for passenger cars and light trucks, noted Commerce, Science & Transportation Chairman Daniel K. Inouye (D-Hawaii). “While it is essential that we support research for the next generation of engine technologies, such as hydrogen fuel cells, technologies already exist that can make the fleet more efficient without sacrificing consumer choice in automobiles. The notion of increasing fuel economy now while planning for the future is common sense, and S. 357 creates a structure that allows for that approach.” |
|
|
