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Bush Will Veto Gas-Gouging Bill

MSNBC story:

The House, eager to do something about record high gasoline prices in advance of the Memorial Day weekend, voted narrowly Wednesday to approve stiff penalties for those found guilty of gasoline price gouging.

The bill directs the Federal Trade Commission and Justice Department to go after oil companies, traders or retail operators if they take "unfair advantage" or charge "unconscionably excessive" prices for gasoline and other fuels.

BIG political mistake. People are very angry about this senseless spike in gas prices and if Bush sides against the people and for the oil companies who are already making billions upon billions in profits every quarter, there will be a strong reaction.


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Comments (34)

I'm not sure why Bush would veto this -- the bill is weak anyway (emphasis mine):

Rep. Bart Stupak, D-Mich., its chief sponsor, in urging his colleagues to support the bill said the issue was whether "to side with Big Oil (or) ... side with consumers who are being ripped off at the gas pump."

But Stupak was forced to soften the bill so that he could get it passed by requiring a president to first declare an energy emergency before the anti-gouging law could be enforced. Oil-state Democrats had wanted such limits.

Givent that he has to delcare it an emergency, ultimately he has control.

Is it a case where, in the event of a true emergency, Bush wants the oil companies to be free to gouge us as hard as they want? So the Republicans can ramrod through permissions for drilling in ANWR?

cirby:

It's a stupid bill, in a bad and damaging way.

It doesn't really define "gouging," but instead lets the Federal Trade Commission define what that is, whenever they feel like it. This is a huge mistake, since it either lets the FTC ignore the problem (define "gouging" really high), or over-regulate (define "gouging" as anything that makes an actual profit).

The worst case is that it opens the door for some really stupid bureaucratic pseudo-regulations that effectively outlaw profits in order to let a couple of politicians get some "feel good" headlines.

If it said something like "in case of a declared emergency, anyone boosting prices by more than X amount in a week is gouging," it might be useful. Instead, we get something that's really dangerous and idiotic, but which a bunch of economically-challenged folks think is a great idea (I've gotten some email forwards about this "wonderful" bill from people who obviously read nothing except the title of the press release).

Paul Hamilton:

Lee, back on 9-11 there was a momentary panic here in Indiana and some gas stations raised their prices to over $5 a gallon that afternoon. Of course there was no justification for such an action, but what it did do was get the governor to declare that profiteering on that tragedy would result in serious consequences and sure enough, there were some prosecutions a few months later.

So it seems to me that any politician with a grain of sense would look at the current situation with prices at record levels for no reason whatsoever and decide that this IS an emergency and start poking around to see if this really is just the rich getting richer, which is what probably 90% of the public believes is the case.

Of course Bush lacks that political grain of sense because the rich are his only constituency, and everything he does is for them. So I can see him just ignoring the price increases, but to actually veto the bill is just foolish.

Paul Hamilton:

Cirby, the thing that makes me the angriest about this whole spiral in prices is that usually, it is completely unjustified.

The best example of that would be the days during and right after Katrina. Prices went absolutely through the roof, and the oil companies used the disaster to justify the price increase.

But the gasoline they were selling to the public had been refined long before the hurricane at a much lower price! That is the textbook definition of profiteering and I believe that case, and the current one as well should qualify for serious investigation by congress.

And if Bush wants to whine about price controls, then he better pass the word along to those oil companies and let them know that making record profits and selling gas at record high prices is something that is going to blow up in their faces sooner or later. The surest way I know to end up with price controls is for the public to believe they're being robbed by corporate interests.

"So it seems to me that any politician with a grain of sense would look at the current situation with prices at record levels for no reason whatsoever and decide that this IS an emergency and start poking around to see if this really is just the rich getting richer, which is what probably 90% of the public believes is the case."

Maybe Bush wants markets to work their magic, and when people can't afford high priced gasoline they'll break down and get bicycles or horses, or resort to public transit --- or just not feed their children milk this week so they can fill their gas tank and drive across LA to their job.

$5 a gallon gas isn't a problem for the people Republican politicians care most about, Paul.

Matt:

If Rep Stupak really cared that much about the price of gasoline, he would simply push to have the federal gasoline tax put on hold until prices come down. That would be immediate, easy relief without the need of involving other beuracracies. The legislation proposed is just to be able to say something was done even thought ultimately nothing would be done.

If Rep Stupak really wants to do something he could introduce a bill that would take $1 billion of the earmarks on any spending bill and have the government build a new refinery to increas the gasoline supply.

Paul Hamilton:

Matt, they are saying the same thing here in Indiana. They want the sales tax on gasoline suspended. But that doesn't address the issue of whether or not we are being gouged by the oil companies.

And remember that if you cut the federal gasoline tax, that will have serious consequences down the road. Literally. Because gas taxes are used for road building and repair.

matt:

Paul,

I think the public is pretty well convinced that the oil companies are gouging them. They are charging the most that they can and are keeping the supply suppressed to justify high prices. If the oil companies were seriously interested in building new refineries they would. With quarterly profits in the billions, they could easily overcome the legal/environmental issues and get what they want.

I don't know how it is in other states, but in my state, the way gasoline taxes are distributed are so uneven that they make almost no difference at the local level. I beleive it is pretty much the same at the national level. Distribution of funds for highway work are based on political issues more than need or an equitable system. Furthermore, road building and maintenance could be supported by other revenues, or slightly reducing other programs, "taxing" earmarks, military spending bills etc.

civil behavior:

There's a real simple answer to gouging.

It's time to institute use of gasoline vouchers. It's time for Americans to break the habit. So much gasoline per person per month. That's it. Forget price problems. Our carbon emissions are a much bigger problem than any gouging.

Level the playing field and those who want to afford more can buy it from the guy who is willing to conserve or take the bus.

Put Americans on a "gasoline allowance," interesting idea....

Paul Hamilton:

You could get the public to accept that in a time of war -- real war like WW2 -- but the idea of gas being priced out of reach will not be tolerated.

It's time to institute use of gasoline vouchers.

Put Americans on a "gasoline allowance," interesting idea....

Congratulations. Chavez and Castro would be proud of you.

scotty:

I'm confused. Isn't this Wizbang blue? I though liberals were FOR higher gas prices in order to force us to get that oil monkey off our backs. Ya know that whole "environmental" shtick that you are all supposed to believe in. Well, now you show your true colors. Environment be damned. I want my cheap gas now! Funny thing is, y'all probably drink bottled water. huh, go figure.

Paul Hamilton:

Scotty, you make a very good point. High prices as an influence for change is a good idea -- in theory. But when you are the one getting gored, your attitude changes in a hurry.

The problem with the current situation is that the excessive pricing is pure profit for the oil companies. If there was a supplemental tax on petroleum products which would be completely dedicated to the development of practical alternative-fueled vehicles, I think a lot of folks might at least see it as the light at the end of the tunnel, but this is just greed.

A windfall profits tax addresses the need to curb excessive price gouging, and its a mechanism that, by its mere mention alone, is a price-gouging disincentive the oil companies already understand.

I think the gasoline allowance concept floated by CB is an interesting idea worthy of discussion, but not if it means Castro and Chavez will want to use my guest bedroom every time they come to town.

Having a national "oil-based gasoilne allowance" that reduce our oil imports by say 10%, would reduce our dependency on foreign oil at the same time spurring the development of alternative fuels to fill the void.

That's a bad thing? and why would Chavez and Castro care?

Explain how the local, state or federal government has any constitutional basis for instituting a "Gas Allowance". (Anybody attempting to introduce legislation like that would be laughed out of the room.) Then you may begin to understand where I'm coming from with my reference to Chavez and Castro.

If you really want gas prices to fall (and I do, too), then we need to deregulate enough to allow more oil refineries to be built in the U.S. There haven't been any built in the U.S. for years because of the high costs and regulations associated.

Also, you may find these numbers interesting. I don't see any evidence of "gouging".

From a practical perspective, you may want to consider the impact a "Gasoline Allowance" would have on the U.S. economy. Shipping companies, trucking companies, sales reps, people using cars to deliver their products, rental car/truck companies...how are you going to explain to these companies that they aren't allowed to have any more gas to complete their business transactions?

A lot of blue collar workers would stand to lose their jobs because of this kind of restriction.

So are you suggesting, Tom, that we need to perhaps subsidize the construction of oil refineries in the U.S.?

How many oil company CEOs are sleeping over at your house this weekend?

"From a practical perspective, you may want to consider the impact a "Gasoline Allowance" would have on the U.S. economy. Shipping companies, trucking companies, sales reps, people using cars to deliver their products, rental car/truck companies...how are you going to explain to these companies that they aren't allowed to have any more gas to complete their business transactions?"

Ok, let's make commerce-related gasoline consumption exempt from the allowance - or give them 105% so they're assured of having more then they need.

Paul Hamilton:

Tom, more refineries are just a band aid. Our addiction to oil is what has put us squarely in the middle of the complete FUBAR called the middle east.

And like it or not, oil as a practical fuel source is running out. The fields where it's accessible at a practical cost are running out. Sooner or later, we will have a real shortage on our hands and we need to have practical alternative-powered vehicles available when it happens. Because the only thing certain is that prices will go up as stocks go down and so long as we need the oil from the mideast we'll have to die for it, and that is simply too high a price when we can do much better on our own.

Subsidize? You think I suggested that? Absolutely not, interesting that you completely made that up.

"Ok, let's make commerce-related gasoline consumption exempt from the allowance - or give them 105% so they're assured of having more then they need."

Oh, yeah, more detailed legislation from an intrusive government. No thanks, I can limit my gas consumption based on cost just fine by myself, thanks. Most of the rest of us who live in a free market system do, too.

Oh, and you still haven't explained the constitutionality of such legislation. If you really want people to start howling, go ahead and try to introduce that disaster.

And like it or not, oil as a practical fuel source is running out.

Interesting that the oil industry seems to disagree with you on that matter. Otherwise, viable alternatives would be front and center in their business objectives.

"How many oil company CEOs are sleeping over at your house this weekend?"

LOL! That actually was pretty funny. I will have exactly 0. I have as much clout in that circle of people as you do.

By the way, Lee. Why would you exempt 75% of the gas consumption in the U.S. if you felt a Marxist "Gas Allowance" is such a great idea?

"Oh, and you still haven't explained the constitutionality of such legislation. If you really want people to start howling, go ahead and try to introduce that disaster."

I haven't looked into it, but the same constitutional basis on which gasoline rationing was instituted in 1974, I suppose... I don't know that the constitution guarantees you a full tank of gas, Tom. Can you point to where it does?

And it might take an "event" like the terrorist destruction of several refineries and/or the Alaska pipelines, to trigger this admittedly heavy step of instituting a gasoline allowance program --

-- or, we might be smart and not wait for an event and act now, and begin learning what steps we need to do (public transport - alternative fuel developments), to get along with less gasoline now.

Maybe introduce a phased-in program. Reduce consumption by 1/4 of 1% every month over a five year period beginning two years from now.

This is scaring you, isn't it ;)

I know the free-market types will say "no way" to the concept of them not being able to fill up their 7 mpg Hummers at will... but send them to Venezuela for refueling - is one answer.

"By the way, Lee. Why would you exempt 75% of the gas consumption in the U.S. if you felt a Marxist "Gas Allowance" is such a great idea?"

Commerce-related fuel use in the U.S. amounts to 75% of our national consumption? Looks like we need to provide tax incentives for business to use alternative fueled-vehicles, eh?

Let's set up a ten-year timetable to do that... with the goal (like John Kennedy's goal of reaching the moon in ten years) of reducing the commerce-related oil-based fuel consumption by 25% at the end of that ten year period.

and my charts are in color! Lol!

Profits increase with the cost of gasoline, and there should be a limit to profits, in my opinion, or the oil companies are too heavily incented to just keep raising prices.

Past oil company profit margins are based on a reasonable profit for reasonably price gas, but unreasonable prices result in unreasonable profits (see beautiful color chart linked above).

If gasoline is forever $3.25 a gallon or higher, we may need to look at oil company profits and weigh the impact of high-priced gasoline on working Americans. Buying gasoline to get to work should not take milk out out babies' mouths.

Got to run now, I'll try to drop by later. Thanks for the thoughtful exchange. I'm not sold on the concept of a gasoline allowance at all, but I think it's an interesting discussion.

Paul Hamilton:

Tom, it's in the interests of the oil companies to maintain the illusion that oil will last forever, but that's not reality. If the people realize just how shaky our supply of affordable petroleum is, they'd be demanding immediate research toward alternative sources of energy and that would be very harmful to the oil companies. They would prefer to just keep boosting the prices higher and higher while holding the monopoly for fuel for our vehicles.

Paul:

But it's not in their best interests. Do you really believe that they would cut themselves off at the knees and have no alternative to make money once the oil reserves "run out"? I really don't believe that. They like making money too much. Not that there's anything wrong with that.

"This is scaring you, isn't it ;)"

Yes!! :)

Your charts may be in color, and I'll admit they're quite spiffy, but they do not break down the costs along with the profits they made. The premise with the chart you provided is that there is something inherently wrong with making a profit. I contend there isn't, especially when you look at the breakdown of the numbers I linked to. I also don't agree with limiting company profits simply because their pricing "seems too high". If there was gouging going on, you'd see that in the link I provided.

Going after companies because they make too much profit isn't going after price gouging. It's another form of class warfare, and it certainly isn't a legitimate reason for legislation.

"Got to run now, I'll try to drop by later. Thanks for the thoughtful exchange. I'm not sold on the concept of a gasoline allowance at all, but I think it's an interesting discussion."

I want to thank you, too. There are far too many discussions that degrade instantly on the main page, and I try to stay out of those now. I was questioning my decision to comment until I saw your responses.

Paul Hamilton:

Tom, you are absolutely correct. It only makes sense that a current energy giant would take the lead in the development of new sources of energy for the new global reality.

But that hasn't happened although clearly the red flags on both the climate and on supplies of oil have been up for a long time. There was a change in corporate attitudes in the 80s and 90s from long term planning for steady growth to one of grabbing all that you can as fast as you can, and I believe that's what's happening here.

Development of new energy sources would be very expensive and would have zero short-term profits, so they aren't appealing to the boards and stockholders of companies who only care about the bottom line.

I think that the breakthrough will come from a smaller company, and they will either become overnight billionaires or they will become the subject of takeover plots by the Exxons and BPs of today. That way, they'll get the profits without the risks or expenses.

Or maybe they'll just keep buying politicians and suffocate research so they can continue to make billions on 19th centrury tech.

Well, however small of a detail, we do agree on something, I guess.

"Development of new energy sources would be very expensive and would have zero short-term profits, so they aren't appealing to the boards and stockholders of companies who only care about the bottom line."

BP seems to be bucking that trend by pouring R&D money into Butanol.

I'm not giving up on the free market system yet.

"BP seems to be bucking that trend by pouring R&D money into Butanol."

That's exactly the kind of "moon-shot" initiative I mentioned -- but I'm not sure that having BP hold the patent on a genetically-engineered biofuel (which I'm guessing would be the case here) is going to insure the affordability of gasoline substitutes - quite the opposite.

"Your charts may be in color, and I'll admit they're quite spiffy, but they do not break down the costs along with the profits they made. The premise with the chart you provided is that there is something inherently wrong with making a profit."

Profits are profits and yes, costs have risen, but the profits remain and are growing -- and the fact remains that for the same amount of "work", oil companies are receiving larger and larger profits as a result of current pricing practices -- because although their materials costs have risen their margins are holding.

I'm not against business making a profit, but the increased profits are not warranted when you realize that

(1) there is nothing the oil companies are doing to "earn" the higher profits. The higher profits are merely a function of higher prices and steady margins, and

(2) the increased retail price of gasoline has a ripple effect throughout the economy -- everything transported becomes more expensive -- the milk for the babies, as well as the chicken you'll be barbecuing and serving the BP execs this weekend, Tom. :)


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