Meaningless gouging bill

Unfortunately, when a vocal group of Americans doesn't understand basic economics and demands action, Congress is all-too-eager to oblige. The latest example is an anti-gas-gouging bill that passed the House this week, 284-141.

First, the bill is meaningless. It would impose stiff fines (up to $150 million) on companies that take "unfair advantage" or charge "unconscionably excessive" amounts for fuel. Those adjectives are open to interpretation and, most likely, are unenforceable. In any event, they would apply only if the president declares an emergency, and then would remain in effect for only 30 days. Even during the Hurricane Katrina emergency, federal investigators could reach no conclusion that anyone competed unfairly.

The bill also would apply to individuals, who could be subject to up to $2 million in fines and 10 years in prison. That's longer than some violent criminals spend behind bars.

Second, the bill belies a complete misunderstanding of free enterprise. Yes, people often do charge excess amounts during times of emergency. Most often, this is to control a limited supply. Without excessive gasoline or hotel prices, the demand for those objects would be uncontrollable. That was the lesson learned in the 1970s when price controls led to long lines at gas pumps and postponed valuable research into alternative fuels.

In any event, this bill would do absolutely nothing about current gasoline prices, which, according to this newspaper, now average $3.20 per gallon in Salt Lake City. That's high, but how could it be considered "unconscionably excessive" when virtually all gas stations are charging similar amounts, and when those prices don't deviate much nationwide? According to inflation calculators available on the Internet, that price equates to about $1.36 in 1981 dollars, which is about what gas cost back then.

The Federal Trade Commission says today's gas prices reflect increased demand, problems in U.S. refineries and a decline in gasoline imports. The United States needs new refineries, but with so much uncertainty in the market, no one seems willing to invest in one.

Americans have an unhealthy dependence on oil. That dependence enriches the nation's enemies through Middle Eastern and Latin American dictators. The only way to escape this dependence is through gasoline prices that are high enough to induce investments in alternatives.

But that is hard to do when Congress insists on playing to the emotions of the least educated among us.