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Anatomy of a bad law
Posted by: McQ on Thursday, May 24, 2007

Yesterday, in a fit of pure pandering, the House passed a bill which outlaws 'price gouging'.

Never mind the fact that expert after expert (and no, not experts with the American Petroleum Institute) point out the pricing problem is "structural" and has to do with tightening supply due to increased demand (you know, like China?) and stagnant (and even declining) refinery capacity.

Never mind that the largest cost to consumers added on to a gallon of gas comes not from the oil companies or the local dealer, but from the government in taxes.

Never mind all of that ... Congress knows it's target audience, and that's an economically deficient American public which is fond of saying, in times like this, "there ought to be a law." And, of course, Congress, who for the most part isn't any better off in their economic knowledge than are their constituents, is happy to oblige.

The law? A travesty:
Defying White House opposition, the House passed legislation Wednesday that would make gas price gouging a federal crime in times of an energy emergency.

In a 284-141 vote, only one more than the two-thirds majority needed under special rules to speed passage, enough Republicans joined the narrow Democratic majority to approve the measure. The Bush administration said the president's advisers would recommend he veto the measure if it passes the Senate.

The bill defines gouging as pricing that is "unconscionably excessive" or "indicates the seller is taking unfair advantage of unusual market conditions ... to increase prices unreasonably."

The legislation would allow the Federal Trade Commission and Justice Department to investigate and prosecute alleged gougers only if a president declared an energy emergency. Upon conviction, oil corporations could be fined up to $150 million and industry officials could be sentenced to up to 10 years in prison and fined up to $2 million.
Anyone. What constitutes "unconscionable excessive" pricing? A penny? A dollar? Five dollars? Or, is it the Potter Stewart pornography test of "I'll know it when I see it?"

Is that the type of law you consider good law? Who gets to decide? How does one apply it fairly? How do those who might be effected by the law figure out what they can or can't do? Do you have to have a lawyer available every time you decide to raise the price of fuel?

Unfortunately it is this type of law done in haste and pseudo-anger which leads to all sorts of unintended consequences. It is an obvious attempt to deflect the heat from Congress and lawmakers onto someone else. It is a crap law. And you need to let those who would impose it (it has to pass the Senate yet) know that and tell them it should be rejected post-haste.
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Previous Comments to this Post 

and stagnant (and even declining) refinery capacity.
With $300 billion in profits for one company alone, you’d think they could... you know... BUILD a refinery or two...
Written By: Scott
URL: http://
With $300 billion in profits for one company alone, you’d think they could... you know... BUILD a refinery or two...
Well when you’re sued at every step by environmental groups when you try or opposed by the NIMBY crowd not to mention the years worth of government hoops (and attendant costs) through which you must jump just to expand existing capacity, much less build new capacity, at some point you just say screw it.
Written By: McQ
Well when you’re sued at every step by environmental groups when you try or opposed by the NIMBY crowd ... at some point you just say screw it.
Written By: capt joe
URL: http://
It’s more like $30 billion, but who’s counting?

More to the point, why should they build something that is probably not going to make them money (due to the massive # of regulations on building a refinery delaying and complicating construction).
Written By: metis314
URL: http://
Hey McQ - can you put the map of the US showing the amount of tax per state that is collected on each gallon of gas (the one from the IBD ed page today) up here? For those who have not seen it, it breaks out like this. On average oil companies make about $0.13 cents profit per gallon of gas. On average, Federal and State taxes are OVER $0.40 cents per gallon. Who’s gouging who? How about Congress passes a law that says they won’t tax something at a higher rate than the company makes in profit?????
With $300 billion in profits for one company alone, you’d think they could... you know... BUILD a refinery or two...
HA! Get a clue man - the oil companies couldn’t even BEGIN to get the building permits for a refinery these days.
Written By: meagain
URL: http://
Once again we see Washington posturing for the voters. During the ‘dad old days’ when the Soviet Union still existed it was said, the Commies were moving toward capitalism, and America was moving toward socialism. It was a snarky joke then and it’s become a sad joke now.

America is moving toward more centralism of power in Washington. Congress uses blackmail to force states to do their bidding. The Democratic Parties has been taken over by the extreme left. The Republicans talk right, lacking the courage of their convictions, acts like the craven cowards they are.
"We have met the enemy and it is us" Pogo
Normally I would take heart in the Supreme Court. Now given its rulings in campaign financing and government confiscation of private property for non government use. I am pessimistic.
"Democracy can only last until the populace realizes they can vote themselves bread and circuses"
We are in the ‘decline’ phase of the American Empire. Capitalism is under attack. The dollar is on the ‘tin foil standard’ heading for ‘the ball of string’. The country is being ’balkanized’ into ethnic communities. Americanism has become passe, if not an obscene word.

The only bright light I can see is, traditional America will last longer than I will,

Written By: James E. Fish
With $300 billion in profits for one company alone, you’d think they could... you know... BUILD a refinery or two...
Try reading the story of the Arizona refinery they’ve been trying to build it since the early 90’s. If everything goes well from now, it might produce product in 2011.

Also it’s kind of hard to talk people into building new refineries when the government is saying they will reduce fuel usage by 20%.
Written By: Jay Evans
URL: http://
Government says it will do a lot of things. Reducing things however, is rarely in their bag of tricks.
Written By: Ike
URL: http://
A willing buyer and a willing seller..........commerce.
If I have something and you want it...... Perhaps we can make the deal.
Written By: darohu
URL: http://
There are very few actions in the United States that are not covered by criminal statutes. The Supreme Court refuses to give meaning to the void for vagueness doctrine, so it is kind of funny to hear conservatives complain about unjust criminal penalties and vague statutes, when they have created, along with the Democrats’ help, the largest penal population in the history of man. I guess it is just a question of whose ox is being gored.
Written By: wodl
URL: http://
"Government says it will do a lot of things. Reducing things however, is rarely in their bag of tricks."

They do a decent job of reducing after-tax or discretionary income.
Written By: timactual
URL: http://
I’m really impressed!
Written By: Tariq

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