WASHINGTON – U.S. Federal Trade Commission (FTC) Chairwoman Deborah Platt Majoras upheld her opposition to federal price-gouging legislation before the U.S. Senate Committee on Commerce, Science and Transportation, despite skepticism from its members, reports Congress Daily.
 
The news source notes that Majoras told committee members during the FTC oversight hearing that she does not believe legislation that would allow the FTC to define price gouging and investigate and prosecute retailers who violate such a law would be practical. The U.S. House passed similar legislation last year.
 
Earlier this year, House Energy and Commerce Oversight and Investigations Subcommittee Chairman Bart Stupak (D-MI) introduced federal price gouging legislation that would make it a federal offense to sell crude oil, home heating oil, gasoline, natural gas or propane at a price that is “unconscionably excessive” or “indicates the seller is taking unfair advantage unusual market conditions (whether real or perceived) or the circumstances of an emergency to increase prices unreasonably.”
 
Majoras maintains that a federal law against price gouging would be difficult to enforce and hurt consumers by causing fuel shortages.
 
“The difficulty of placing a statute on price gouging is how you define it. In other words, if you raise prices for one reason maybe that’s okay. But if you raise prices because you are a just bad person and you just want to gouge, that’s another,” Majoras told the committee. “If you put a constraint on price, as well intentioned as it is ... the difficulty in enforcement would be in identifying [it],” she told the committee, according to Congress Daily.
 
Meanwhile, a new American Council for Capital Formation study suggests that penalizing oil and gasoline companies for so-called price gouging would cost the U.S. economy nearly $2 billion during a national emergency “on the scale of Hurricanes Katrina and Rita,” writes the Associated Press.
 
The study states that such legislation would “cause long lines at service stations and fuel shortages reminiscent of the 1970s energy crisis,” notes the AP, adding that oil companies concerned about being accused of gouging would “shy away” from paying higher prices to bring in more supply.
 
“What we seem to learn from history is that we never seem to learn from history,” said former House Ways and Means Committee Chairman Bill Archer (R-TX), who serves on the American Council’s board. “Every time this has been tried before, it has been counterproductive,” he added.
 
The study also notes that price gouging legislation “would distort prices, causing energy giants some reluctance about exploring for new supplies,” writes the AP.