Pain at the Pump: Who's Gouging Whom?
Feeling the heat from Americans and members of his own party in Congress, President Bush today is speaking out against price gouging. He is expected to ask state governments to investigate whether the price at the pump is being illegally manipulated. While Bush's engagement in the gas crisis is a step forward, he has for too long sat idly by as Americans have suffered under the strain of increasing gas prices. When Bush came into office in January 2001, the average price of a regular gallon of gas was $1.46. Today, the price is $2.91, a 100 percent increase over the course of the Bush presidency. It remains to be seen if Bush is serious about taking action on this issue, or if this is merely a political overture.
- The Bush administration has consistently looked the other way on price gouging. Under President Bush, the Federal Trade Commission (FTC) has looked the other way when it comes to claims of price gouging. Even during Hurricane Katrina, when price gouging was rather evident, the FTC investigation "found no evidence of collusion among oil companies in the 2005 gas price surge." Numerous bills were introduced in the wake of Katrina to address these issues by both Republicans and Democrats, yet the administration and Republican leadership sat on the sidelines and allowed all the bills to go nowhere. Only recently House Speaker Dennis Hastert (R-IL) and Senate Majority Leader Bill Frist (R-TN), "feeling the political heat," sent a letter to Bush on the gas crisis.
- While Americans suffer rising prices, oil companies are enjoying their biggest profits ever. Perhaps the biggest thing fueling America's anger over gas prices are the tremendous profits that oil companies are making. Last year, ExxonMobil recorded the highest profit of any company in history: over $36 billion. Record profits have not only more than doubled CEO salaries, but they have driven up political contributions a staggering $450 million in the past six years. Sen. Arlen Specter (R-PA) suggested that he may consider a tax on the oil companies' excessive profits. Sens. Carl Levin (D-MI) and Harry Reid (D-NV) joined his call.
- In the absence of leadership from the federal government, states are taking the lead on price gouging. Bush's idea of action is turning to the states and asking each of them to investigate the issue of price gouging -- however, most states have already been doing this. In many states, governments have been exercising whatever authority they have to control surging gas prices. States including Missouri (PDF), California, Wisconsin, New York and South Carolina have been working hard to protect the pocketbooks of their citizens. While this action is good, what is needed, as New York Attorney General Eliot Spitzer has said, is more federal oversight and "greater federal scrutiny of possible market manipulation practices."