SECRETARY OF ENERGY STATES BILL COULD INCREASE GAS PRICES IN THE LONG RUN

Washington, May 23, 2007 - "As Chairman of the Commerce, Trade & Consumer Protection Subcommittee, I held hearings on the high price of gasoline, especially focusing on pricing after disasters such as hurricanes," stated Rep. Cliff Stearns (R-Ocala).  "In response, I developed legislation that, for the first time, gave the federal government authority to combat price gouging on the sale of gasoline and diesel.  This language was included in H.R. 3893, the Gasoline for America's Security Act, and passed by the House in 2005.  Although I am committed to protecting consumers from unfair trade practices and pricing schemes, the legislation before the House today will not help consumers and will hurt small business owners."

The House today approved H.R. 1252, the Federal Price Gouging Protection Act.  The bill is supposed to protect consumers from unfair gasoline pricing, but the legislation is seriously flawed.  Noted Stearns, "This bill would protect the public from prices that are 'unconscionably excessive' or take unfair advantage' of consumers, but it fails to define what is 'unconscionably excessive' or what is an 'unfair advantage.'  This lack of definitions renders the bill practically unenforceable."

The Secretary of Energy, Samuel Bodman, expressed opposition to H.R. 1252 in a May 22nd letter to Congress.  Bodman wrote, "Neither the Department of Energy nor the Federal Trade Commission has found credible evidence that rising prices are due to collusive behavior among private oil companies.  He also wrote, "H.R. 1252 could deter investment, potentially increasing gasoline prices in the long run."

In addition, instead of targeting the big oil companies and refiners, the bill could harm the small business owners who make up the bulk of gasoline retailers.  The National Association of Convenience Stores weighed in with this; "Please understand that 95 percent of gasoline sold at retail in America is sold by an independent marketer, with nothing more than contractual relationships with their supplying refiners.  And nearly 60 percent of those retailers own precisely one gas station.  They just sell commodities at a price that reflects market conditions."