It shall be unlawful for any person to sell, at wholesale or at retail in an area and during a period of an energy emergency, gasoline or any other petroleum distillate covered by a proclamation issued under paragraph (2) at a price that–
(A) is unconscionably excessive; and
(B) indicates the seller is taking unfair advantage of the circumstances related to an energy emergency to increase prices unreasonably.
The first nice thing I have to say about this bill is that it is mercifully short at only 12 pages. Unlike the monstrous behemoths written into law by the previous Congress, such as the Energy Policy Act of 2005, which I’m convinced that no congressman actually read, I suspect there are a few– not many, mind you, but a few– representatives who’ve actually read the Federal Price Gouging Prevention Act in its entirety. This of course is an entirely different proposition from claiming that there are any representatives who in fact understand the economics behind it.
The second nice thing about this bill is that it would only hold during an energy “emergency”, which is legally defined with reasonable narrowness and specificity, applying only to a 30-day period triggered by presidential declaration. That will hopefully limit the amount of damage this legislation could do.
The third good thing about this bill is that it leaves enforcement up to the Federal Trade Commission. I am quite certain that, under any administration, FTC staff are going to be vastly more economically literate than the typical judge, jury, or politician, and will approach the analysis of what is actually going on with supply and demand in a given situation with some degree of basic understanding.
Now, in case you feel cheated that I didn’t mention any of the potential criticisms of this legislation, let me outsource that to Lynne Kiesling:
We’ve commented here before on how anti-consumer, ridiculous, specious, and ineffective such legislation would be. Part of the reason that’s true is that Rep. Stupak is wrong: “price gouging” is such a subjective and ill-defined concept that the FTC is quite unlikely to be able to determine it once they had a law to uphold….
…not only is Rep. Stupak’s legislation vague and ill-defined, it’s substantively vacuous. It’s a strong statement on the populist demagoguery that characterizes politics that such a strong majority of the House voted for it, reinforcing my perception that this is all about posturing and nothing about underlying economic fundamentals or the true well-being of their constituents.
So there you have it, as we try to be fair and balancedTM, presenting both sides of the argument. How could you expect anything less from Econbrowser?