That '70s show
The House tries a stagflation-era fix for high gasoline prices
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The U.S. Congress-which does not see $250 billion budget deficits as "unconscionably excessive" nor $34 trillion in unfunded Medicare liabilities as any reason to act-has had it with $3.20 a gallon gasoline.
Right in time for the high-travel Memorial Day weekend, the House passed the Federal Price Gouging Prevention Act. The measure would, in the event of a presidential declaration of an energy emergency, make it illegal for individuals or companies to charge "unconscionably excessive" prices for gasoline or otherwise take "unfair advantage" of customers. Penalties would be as high as $150 million for companies and $2 million and 10 years in jail for individuals.
The bill passed the House by a vote of 284-141, and the Senate plans to take up a version of it later this month. In the mind of chief sponsor Rep. Bart Stupak (D-Mich.), the vote comes down to a very simple choice: Legislators can either "side with Big Oil" or "with consumers who are being ripped off at the gas pump."
But Stupak's opponents-and energy market analysts-say it is a bit more complicated than that. They note that Stupak's legislation does not define what price would be illegal, forcing gas station operators to guess whether they were in compliance with the law. "I don't know what 'unconscionably excessive' means," said Rep. Joe Barton (R-Texas).
Pointing back to the 1970s, opponents also say that attempts by government to control prices lead to unconscionable shortages and unfair long lines for gasoline. Only increases in supply or decreases in demand, they argue, will bring down gasoline prices without harmful side effects.
These concerns led the White House, in a statement, to promise a veto, saying Stupak's legislation "would harm consumers, the very people the bill is touted to protect."
Meanwhile, market forces seemed set to provide some relief at the pump. Several gasoline refineries came back online after being shut down for repairs, and oil prices fell on news that Nigeria's oil unions had ended a strike.
TRAVEL: High gasoline prices did not keep Americans off the road over the Memorial Day weekend. AAA estimated that 38 million Americans traveled 50 miles or more during the holiday, even though gas prices averaged $3.20 per gallon nationwide. The number of Americans hitting the road was up 1.7 percent over last year. AAA Travel vice president Sandra Hughes says families are finding ways to economize on their trips. "They will travel for fewer days and will save money by staying in less expensive hotels and eating in cheaper restaurants," she said, "but they will continue to take vacations and plan getaways."
HOUSING: The nation's third-largest home builder, Pulte Homes, announced last week that it would fire about 1,900 workers, reducing its work force by 16 percent. The move was part of an industry-wide cutback in employment as the housing market continues to soften. Pulte had already cut its staff by 25 percent in late 2006 and early 2007. "The homebuilding environment remains difficult and our current overhead levels are structured for a business that is larger than the market presently allows," said CEO Richard Dugas. The Census Bureau reported 1.53 million housing starts in April, down from 1.82 million in April 2006.
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