Powerless House passes pointless bill on gas prices

Gas prices at 106The U.S. House of Representatives passed some meaningless legislation today that purports to criminalize price-gouging on gasoline. In practice, the conditions under which it could be applied are so limited that it’s nothing but window-dressing. From the Los Angeles Times:

The legislation would give federal authorities the power during presidentially declared energy emergencies to investigate and prosecute anyone selling fuel at a price that is “unconscionably excessive” or “indicates the seller is taking unfair advantage unusual market conditions.”

The White House contends that the definition of gouging is vague and would make the law difficult to enforce. The administration also questioned the need for the legislation, noting that many states currently have price-gouging laws.

Can anybody find any evidence that a federal energy emergency has ever been declared in the United States? I can’t. Also, note the words “unconscionably” and “unfair,” both of which require an investigation to prove much more than that gas prices are higher than some drivers would like.

The Times story explains the justification for the bill:

“I was at a funeral Saturday, and when the monsignor greeted me, he said, ‘My God, Bart, you have to do something about these gas prices!’ ” said Rep. Bart Stupak (D-Mich.), chief sponsor of the anti-gouging bill.

Rep. Sheila Jackson-Lee (D-Texas) told her colleagues: “I can’t go home, and I imagine none of you can, without saying we tried to do something.”

Well, mission accomplished, I guess. Now you can say you tried.

In March, while Ontario dealt with a localized shortage caused by a fire at a major refinery at Nanticoke, Ont., the National Post‘s Colby Cosh wrote cogently in defence of gouging. The key observation being that gasoline retailers were allowing their pumps to run dry rather than hike their prices to the point where they sold out just as the next tankerload was coming in:

Yes, gas prices are up in Toronto and Montreal, but during the worst of the crisis dozens of retailers simply kept offering gas to customers at or near the same old prices until their own tanks were empty. This is baffling behaviour for an industry supposedly dedicated to shaking the customer down for every last penny. Why did so many gas stations close down rather than “gouging” the customer within an inch of his life with three- or four-dollar pump prices?

The question answers itself: Retailers refused to gouge because they feared accusations of gouging. No one wanted to turn a month or so of straitened supplies into years of public hostility.

Yet if anything is obvious, it’s that the alternatives to gouging were clearly no better for the public welfare, and probably much worse. Many retailers imposed uniform litre limits on all customers, treating those who might have had important business and been willing to pay a little extra just the same as those who continued to make unnecessary trips. Truckers with perishable loads were left unable to outbid the public for extra diesel supplies. The outright shutdown of some stations hit relatively remote communities like Thunder Bay especially hard.

It seems even the grandstanders in the U.S. Congress recognize a basic economic fact: if the government forces the price of anything to stay lower than supply and demand would normally put it, shortages are the inevitable consequence. In this case, gas would be cheap, but you couldn’t get any — not without knowing a guy, say, and maybe making a little payment under the table to get a bit of his secret stash.

There’s no magic in this, no collusion, and no gouging. North America’s thirst for the high-test is just catching up with the world’s ability to supply it. The only way to escape the situation is to end the addiction.


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