“It will not reduce prices,” said Mark Schniepp, director of the California Economic Forecast.
As a gallon of regular gasoline in California reached an average of $6.06 Thursday — a new record — the House passed the Consumer Fuel Price Gouging Prevention Act by a 217-207 vote. All Republicans voting opposed the bill along with four Democrats.
All the yes votes came from Democrats, who saw the fight against gouging as an important step in bringing prices down.
Rep. Doris Matsui, D- Sacramento, said the measure “will help keep prices under control as we continue to weather this international oil shortage.” Rep. Ted Lieu, D- Torrance, said the legislation “hopefully will stop oil companies from price gouging. Public sentiment is everything.”
But there was little hope outside of the House that the legislation would spur lower prices. The first problem is that its chances of passing the Senate are dim. Sixty votes would be needed to advance the legislation, and Democrats control 50 seats.
As the House was voting, Senate Republican Leader Mitch McConnell of Kentucky made it clear where he stood.
“I understand the House is wasting its time pretending that inflation is all the fault of evil corporate profiteers. I guess the profit motive hadn’t been invented yet in 2019 when Republicans had unemployment low and inflation low at the same time,” he said.
Some Democrats had a more measured view of the bill, though most voted for it in the end.
“I don’t think it’ll make much difference,” said Rep. Jim Costa, D- Fresno. “I wish the president would summon all of the major energy companies and said. look we have a short term problem and a long term problem. How do we work on this together?”
Rep. Lizzie Fletcher, D- Houston, voted no. The bill, she said, “would not fix high gasoline prices at the pump, and has the potential to exacerbate the supply shortage our country is facing, leading to even worse outcomes”
New Anti-Gouging Tools
The legislation would permit the president to issue an energy emergency declaration, making it difficult for companies to impose enormous increases in gasoline and home oil prices.
The Federal Trade Commission could determine possible market manipulation, and a new FTC division could investigate the fuel markets.
Major oil companies have reported profits of about $40 billion in the first quarter of this year, Associated Press reports.
There’s little agreement among experts as to whether those figures are excessive, or what can be done to stabilize supplies and prices.
“The price of gas is driven much more by the classic economic case of demand being stronger than supply,” said Jared Walczak, vice president of state projects at Washington’s Tax Foundation, an economic research group.
“The problem with anti-gouging is that prices aren’t high because people who weren’t previously greedy got greedy all of a sudden,” he said.
Chris Edwards, director of tax policy studies at the libertarian Cato Institute, saw the legislation as more government involvement that could lead to trouble.
“Current federal efforts to increase regulation—such as persecuting energy companies for so-called gouging—would reduce business incentives to produce, and thus exacerbate inflation,” he said.
Any Effect On Oil Prices?
Some familiar Democratic-friendly voices also were skeptical.
“There is no material prospect that, in any enduring way, gouging legislation can have any substantial effect on inflationary pressure,” Clinton administration Treasury Secretary Lawrence Summers told Bloomberg Television’s “Wall Street Week” last week.
The oil industry warned that the legislation would hurt any efforts to stabilize prices or supplies.
“This ill-advised and misguided legislation sets a dangerous precedent without meaningfully addressing the root cause of rising energy prices. It’s well past time for Congress to stop the finger pointing and get serious about delivering real solutions that deliver meaningful relief for American consumers,” said Frank Macchiarola, senior vice president at the American Petroleum Institute.
The House does not return to Washington for votes until June 7, allowing members to return home to explain to constituents how they tried to help bring down gasoline prices.
Rep. Katie Porter, D- Irvine, who’s in one of the state’s swing districts, said she heads home with “a lot of things to point to” that could help ease the pain at the pump.
So why, she was asked, haven’t prices come down?
“That’s why this bill is needed,” she said.
©2022 The Sacramento Bee. Distributed by Tribune Content Agency, LLC.
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