The circus surrounding price-gouging legislation

With great predictability, Congress flails around for scapegoats when gasoline prices climb in the spring. This year’s congressional outrage is no different. For the last 30-plus years, we’ve been treated to the spectacle of politicians and policymakers blaming others for our nation’s energy woes while year in and year out, they return to the same failed policies that have created this entire mess in the first place.

The truth is, a progressive bloc in Congress has systematically and consistently made us more and more dependent on foreign sources for oil by creating a legal, political and regulatory climate too hostile to allow needed domestic refining capacity. Now, many of the same are now clamoring to know why prices are so high. Little wonder politicians call for hearings and want to pass new legislation to distract the public from the mess that they have made. When the public demands to know why prices are high, Congress points fingers and attempts to create villains rather than addressing the core problems of supply and the need for increased refining capacity.

Each spring, lawmakers question the timing of scheduled maintenance that require temporary shutdowns, but fail to mention most are the result of government mandates they sought to put in place. In addition to the typical nonsense, now Congress wants to enact legislation against an ill-defined beast called “price gouging” that would impose de facto price controls.

If consumers, via the voice of their elected officials, feel that the price of gas is too high and become grounds for “price gouging” charges, then do we need legislation banning high-priced popcorn, candy and soft drinks at movie theaters? Of course not. The marketplace works not because we like paying more, but because we choose to pay a certain price for certain things we demand. We always have the option to buy less, buy elsewhere or not buy at all.

The market system is truly a marvel. Despite terrorism, civil war and lunatic leaders such as Venezuela’s Chavez and Iran’s Ahmadinejad, and a voracious energy appetite in rapidly developing nations like China and India, the availability of gasoline in the United States has continued without interruption. American citizens can purchase gasoline at any time, day or night, with no fear that the pump will run dry.

The only exception to this was when President Carter imposed price controls on gasoline and we experienced nationwide shortages and long gas lines. With one executive order, Carter dubiously accomplished what OPEC, the Ayatollah and Saddam Hussein all threatened, but failed, to do.

Out of all the options, Congress now wants to return to these failed Carter-era policies. Legislative proposals currently working their way through the Senate seek to force producers, refiners and retailers to lower gasoline prices by imposing strong penalties when “price gouging” can be alleged under the vaguest interpretations imaginable.

Imposing implicit price controls on gasoline through price gouging legislation will have the same effect as explicit price controls — shortages and gas lines. Instead of readily available gasoline at market-determined prices, there could be periodic episodes of no gasoline at any price.

That’s an infinitely higher price than we are paying now and one Americans will not stand for.

Rather than trying to mandate price controls, Congress should outlaw government gouging. After all, government takes more from every gallon of gas — an average of 42 cents in federal and state taxes — than retailers or producers make in profit.


Landrith is the president of Frontiers of Freedom, a public policy foundation dedicated to promoting free market principles and the ideals embodied in the Declaration of Independence and the Constitution.