House confronts gas price gouging

Analysis:

This Cox News story is based upon a bill that passed in the House that deals with the issue of price gouging by the oil industry. The headline suggests that the House took a strong stance on this issue since the term “confronts” is used and then the first sentence says “Defying White House opposition, the House passed legislation Wednesday that would make gas price gouging a federal crime in times of an energy emergency.” There are two Democrats cited in the shortened version of this article that appeared in the Grand Rapids Press. The original version has a third Democrat and two Republicans. The GR Press version also cites a White House response to the House vote.

What is omitted from the story is the actual language of the bill other than the one line about price gouging. Despite the story using words like confront and defying the House bill was actually changed to be more accomodating to the oil industry. According to the staff at Corporate Crime Reporter the original bill did not include the condition that the Federal Trade Commission could go after price gougers only during presidentially-declared energy emergencies. Ask yourself how often a President has done that? The current administration didn’t even declare an energy emergency during Hurricane Katrina.

In the original version of the COx News story they also cite someone from the National Petrochemical and Refiners Association who says that “there is no evidence of market manipulation or price gouging.” The story does not source any consumer group like Public Citizen which testified before Congress on this matter and had clear talking points on how to protect consumers. Another significant omission from this story is that there is nomention of how powerful the Oil lobby is in Congress nor the correletion between how the House members voted and which ones receive money from the oil industry.

Story:

Defying White House opposition, the House passed legislation Wednesday that would make gas price gouging a federal crime in times of an energy emergency.

In a 284-141 vote, only one more than the two-thirds majority needed under special rules to speed passage, enough Republicans joined the narrow Democratic majority to approve the measure. The Bush administration said the president’s advisers would recommend he veto the measure if it passes the Senate.

The bill defines gouging as pricing that is “unconscionably excessive” or “indicates the seller is taking unfair advantage of unusual market conditions … to increase prices unreasonably.”

The legislation would allow the Federal Trade Commission and Justice Department to investigate and prosecute alleged gougers only if a president declared an energy emergency. Upon conviction, oil corporations could be fined up to $150 million and industry officials could be sentenced to up to 10 years in prison and fined up to $2 million.

The Senate is scheduled to vote on a similar measure next month as part of a larger energy bill. The anti-gouging provision already passed the Senate Commerce Committee.
The vote came as gas costs are the talk of the nation � prices at the pump are at record highs� and the Memorial Day weekend begins the summer vacation season, when millions of Americans hit the highways. “I can’t go home, and I imagine none of you can, without saying we tried to do something,” Rep. Sheila Jackson-Lee (D-Texas) declared on the House floor.

The author of the House bill, Rep. Bart Stupak (D-Mich.), told his colleagues that they had a “clear choice.” “Stand up for consumers,” who are paying a nationwide average of about $3.23 a gallon at the pump, or “side with Big Oil” when the industry is reaping “enormous profits.”

He said the bill is “a first step in addressing the outrageous prices we are seeing at the gas pump.”

However, the Bush administration issued a policy statement warning that “this bill could result in gasoline price controls and in some cases bring back long gas lines reminiscent of the 1970s.”

The White House said the legislation would “harm consumers” by interfering with normal market mechanisms and discouraging suppliers from providing enough gasoline to meet demands.

If Congress passes the measure and sends it to Bush, the statement said, “his senior advisers would recommend that he veto the bill.”

Text from the original article ommitted from the Grand Rapids Press version:

If enacted, this would be the first federal law against gas price gouging. However, Georgia, Florida, Texas and North Carolina are among the more than two dozens states that have such laws.

Rushing the bill through before Friday’s start of the Memorial Day recess, the House acted under a suspension of regular rules; a two-thirds majority for passage was required and amendments were banned. If Bush were to veto the bill, it could be overridden by a two-thirds majority vote in the House and Senate.

Leading the opposition, Rep. Joe Barton (R-Texas) said the legislative language was vague, “I don’t know what ‘unconscionably excessive’ means.” He said this “flawed bill” was a only “symbolic” congressional action at a time when constituents are angry over high gas prices.

Republican Whip Roy Blunt of Missouri warned that “mom and pop” owners of filling stations, truck stops and convenience stores could end up being prosecuted for pricing they didn’t know was illegal.

“The practice of gouging consumers at the pump is extremely rare, but if it occurs, we should prosecute those who do it to the fullest extent of the law,” said Blunt.

“Unfortunately, the bill brought forth by House Democratic leadership today was written so poorly and included so few details that small retailers and local service station operators could be thrown in jail without knowingly committing a crime.”

Supporters note that gas prices at the pump have jumped to more than $3 a gallon at a time when global crude oil prices have declined. Rep. Ed Markey (D-Mass.) ridiculed claims by some Republican opponents of the bill that the high prices are a result of supply and demand.

“Consumers are forced to supply whatever money the oil companies demand,” he said. “Christians had a better chance against the lions than consumers have at the pump” against giant oil suppliers.

But the oil industry said that the bill, if enacted into law, could backfire and cause shortages.

“We’d strongly encourage the Senate to consider the unintended consequences should it debate this or a similar bill,” said Charles Drevna, executive vice president of the National Petrochemical and Refiners Association, an oil industry trade group. He said the legislation may provide “a good political talking point” but there is no evidence of market manipulation or price gouging.