Facts At A Glance

THE BUZZ ON FEDERAL "PRICE GOUGING" LEGISLATION

"The consensus in the mainstream media and amongst economists is that so-called 'price gouging' legislation is bad for consumers, bad for business and bad for the American economy. History has shown that federal price controls fail miserably in attempting to provide relief, and that the market, not the government, is better able to deal with price fluctuations and the issues of supply and demand."

Charles T. Drevna
Executive Vice President, National Petrochemical & Refiners Association (NPRA)
June 13, 2007

New Hampshire Union Leader / Scripps Howard News Service Editorial:

"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." (Editorial, "Gas gouging? Price controls are worse,"Scripps Howard News Service, May 29, 2007 [emphasis added])

Los Angeles Times Editorial:

"[D]espite the overheated political rhetoric and the frustration of consumers, the real culprit for skyrocketing prices at the pump isn't the oil giants. It's us. … Consumer advocates claim refiners are artificially restricting supply by refusing to expand. Actually, they're just making logical business decisions. President Bush has called for the production of 35 billion gallons a year of alternative fuels, mostly ethanol, by 2017, and Congress is considering even more ambitious bills. With alternatives replacing gasoline, it would be crazy to spend hundreds of millions building a new gasoline refinery that might not be needed by the time it's finished." (Editorial, "Don't blame oil companies," Los Angeles Times, May 25, 2007 [emphasis added])

USA Today Editorial:

" If this grandstanding were harmless, it might be best ignored. But this year's version actually stands to make matters worse. On Wednesday, the House passed a bill that would use government edicts and criminal prosecutions to determine gas prices. A narrower but still troubling measure has been approved by a Senate committee. … A seller of gasoline could be thrown into prison for up to 10 years, in the House bill, for the crime of selling at the best price the market will bear. When price can't be used to allocate a commodity in scare supply, shortages occur. In the 1970s, a host of restrictions on prices meant that the Arab oil embargo led not only to a surge in prices but lines at gas stations." (Editorial, "Our view on gas prices: Grandstanding on gas,"USA Today, May 25, 2007 [emphasis added])

The Wall Street Journal Editorial:

"The inconvenient fact is that there's no evidence of price rigging by Big Oil or the tens of thousands of independent service station owners across America. The causes of higher gas prices include $65 per barrel oil caused by rising global demand and geopolitical tensions; a record high U.S. gasoline consumption of 380 million gallons a day; and refined gasoline shortages caused by Congressional rules and mandates. Far from withholding production to raise prices, U.S. gasoline production of 8.8 million barrels per day is higher than any time in history and refineries are getting more gas per barrel of oil than ever before. … Domestic refining capacity is stretched in part because environmental laws discourage the building of new refineries. Meanwhile, new mandates for ethanol and other 'boutique' gasoline blends make it harder for the industry to meet refining shortfalls." (Editorial, "Pains at the Pump," The Wall Street Journal, May 25, 2007 [emphasis added])

Bernard L. Weinstein, Center for Economic Development and Research, University of North Texas:

"[I]n Congress, price gouging is a term embraced by some members to pass the buck and blame the oil industry for high prices rather than their own shortsightedness and unwillingness to construct a comprehensive energy policy for the United States. The proposed bills do nothing to address the underlying fundamentals that interact to determine price: namely, supply and demand. Nor do they recognize that crude oil is a globally traded, and therefore globally priced, commodity. (Bernard L. Weinstein, Op-ed, "'Price-gouging' dog won't hunt," Fort Worth Star-Telegram, May 30, 2007 [emphasis added])