House Takes up Energy Price Gouging Measure

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The House approved criminal penalties and fines of up to $150 million Wednesday for energy companies caught price gouging as lawmakers responded to public anger over high gasoline prices and huge oil industry profits.

WASHINGTON — The House approved criminal penalties and fines of up to $150 million Wednesday for energy companies caught price gouging as lawmakers responded to public anger over high gasoline prices and huge oil industry profits.


The legislation, receiving broad bipartisan support, passed 389-34, and must now be considered by the Senate.


But a proposal aimed at making it easier to expand or build refineries fell short 237-188. It needed two-thirds approval to pass under special House procedures.


Democrats said the speed-up in permits might reduce environmental protection and usurp local say over refinery construction.


President Bush, after meeting for more than an hour with more than a dozen Republican and Democratic members of Congress, said it was important "to make sure our consumers are treated fairly" by the oil markets.


"The price of gasoline should serve as a wakeup call ... that we've got an energy security problem," Bush said after the meeting.


The White House has not given a position on the House-passed gouging legislation.


While Democrats voiced support for the bill, some criticized the president for saying last week that he did not believe there has been gouging by oil companies.


"The American people are quite fed up. ... They know gouging when they see it and they're being gouged," said Rep. Bart Stupak, D-Mich.


"American consumers are demanding protection from price gouging," declared Rep. Sherwood Boehlert, R-N.Y., in floor debate.


Rep. Heather Wilson, R-N.M., chief sponsor of the legislation that for the first time would create a federal law on energy price gouging, said, "This is one thing we have to do."


Supporters of the refinery bill said delays in permitting have kept industry from building new refineries. Opponents, however, argued the bill would reduce environmental protection.


Rep. Rick Boucher, D-Va., said slow permitting is not preventing refinery construction.


"The real reason we have a refinery shortage is the companies that own refineries are profiting enormously from the ... refinery bottlenecks," said Boucher.


The gouging legislation calls for penalties of up to $150 million for refiners and other wholesalers and $2 million for retailers. It covers marketers of gasoline, diesel fuel, crude oil and heating fuel.


Wholesalers and retail outlets such as corner gas stations and service station chains face penalties triple the amount of their unfair profit. Violators also could go to jail.


The measure also calls on the Federal Trade Commission to develop a definition of price gouging and pursue civil penalties if violations occur. Criminal prosecution would be up to the Justice Department and states.


With gasoline topping $3 a gallon across much of the country, lawmakers have been scrambling to put together legislation aimed at soothing public anger, hoping to demonstrate that Congress was doing something about high energy costs.


Rex W. Tillerson, chairman and CEO of Exxon Mobil Corp., defended the company's record profits and high gas prices in an interview on NBC's "Today" show Wednesday.


"Obviously, the truth is we do not get together and manipulate prices, that would be illegal," he said, adding that there have been several past investigations of price collusion in the oil industry and none of them have found any evidence of collusion.


"The profit we earn is what the market gives us ... the price is set on the open market," Tillerson said.


The House action on price gouging "will send a strong signal to those who would gouge consumers that we expected them to be prosecuted to the full extent of the law," House Majority Leader John Boehner, R-Ohio, said.


About half of the states have some price gouging statutes, but enforcement and penalties vary widely. There is no federal law prohibiting price gouging nor agreement among the states on what constitutes price gouging.


State attorneys general have lobbied for a federal price gouging law.


"Nationally there is no common definition of price gouging," Arizona Attorney General Terry Goddard told a Senate hearing in November. He said some states have laws that apply only to emergencies, while others allow up to 20 percent price increases.


The FTC, although it doesn't have authority to regulate price gouging, can investigate whether there is collusion by oil companies under federal antitrust law. The oil industry says there have been numerous such investigations by the FTC and the agency has never prosecuted anyone for price manipulation.


Source: Associated Press


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