The U.S. House of Representative passed the Federal Price Gouging Prevention Act, HR 1252, on May 23 that makes it a criminal offense to sell crude oil, gasoline, natural gas or petroleum distillates at a price that is "unconscionably excessive" or is taking advantage of market conditions "whether real or perceived."

The bill goes to the Senate and then to the President for his signature before it becomes law.

The authors of the bill did not define what constitutes price gouging, or what is "unconscionably excessive" or what determines an "unreasonable price increase."

The House left that up to the Federal Trade Commission and Justice Department to figure out later.

The criminal penalties entail a maximum of 10 years in prison and a fine of $2 million dollars. Civil penalties could include a maximum fine of $3 million or a fine of not more than 3 times the amount of profits gained through gouging.

"It is blatantly irresponsible of the Congress not to specifically define what constitutes price gouging," Alex Mills, president of the Texas Alliance of Energy Producers, said. "And, to add criminal penalties without providing clear compliance guidelines is government at its worst.

Ironically, the action of the House would discourage oil companies from increasing supplies that would lead to lower prices," Mills said. "Threatening oil company executives with criminal prosecution is simply counterproductive. What executive would recommend investing billions of dollars in domestic oil production if such a risk exists? If enacted into law, this bill"s impact on the industry"s ability to attract investment capital would be enormous, affecting everything from exploration and production to the building of refineries."

One television program called it ‘Government Gone Wild,"" Mills said. "I call it ‘Government Gone Goofy". The bill will accomplish just the opposite of its intended purposes. If the bill passes, consumers will be faced with even shorter supplies of petroleum and prices will be more volatile." 

PIN/Oilonline.Com