Bush Threatens Veto Of Anti-Gouging Bill
Bush threatens veto of anti-gouging bill
http://www.marketwatch.com/news/stor...30B8A570ED1%7D
By William L. Watts & Ruth Mantell, MarketWatch
Last Update: 3:06 PM ET May 23, 2007
WASHINGTON (MarketWatch) -- President Bush is likely to veto legislation passed in the House today that would create hefty fines and criminal penalties for gasoline price-gouging, the White House said Wednesday.
The legislation squeaked by in a House vote -- 284-141 -- under special procedures that required a two-thirds majority.
The Democratic plan aims at battling rising gasoline prices by requiring the Federal Trade Commission to define "price gouging." The bill would create fines and criminal penalties, including jail time, for industry executives found guilty of gouging.
The White House, in a formal statement of administration policy, said the legislation amounted to price controls that would hinder oil companies and retailers from responding to market signals, potentially worsening fuel shortages.
"Gasoline price controls are an old -- and failed -- policy choice that will exacerbate shortages and increase fuel hoarding after natural disasters, denying fuel to people when they most need it," the White House said, adding that Bush's senior advisers would recommend a veto of the House bill or any similar legislation that makes it to his desk.
The vote came as lawmakers weigh a number of measures in the face of soaring gasoline prices. The House ignored a veto threat Tuesday to overwhelmingly pass legislation that would allow the Justice Department to sue members of the 11-nation Organization of Petroleum Exporting Countries, or OPEC, under U.S. antitrust laws.
Democrats defended the anti-gouging package, saying it provides safeguards aimed at protecting small businesses and taking account of supply disruptions created by natural disasters and other problems.
Republicans are "asking this congress to wait until a more perfect time ... to help the American consumer out," said Rep. Bobby Rush, D-Ill. "The American people are suffering right now and they are demanding this Congress take action right now. There can never be a more perfect time for this Congress to take action."
The legislation's sponsor, Rep. Bart Stupak, D-Mich., added a provision to the bill that allows the FTC to pursue price-gouging only after the president has declared an energy emergency. A bill pending in the Senate has the same provision.
Republicans said the addition of the provision was an effort to shore up support for the bill among oil-patch Democrats.
Elsewhere on Capitol Hill, Sen. Charles Schumer, D-N.Y., said at a hearing that oil companies have grown too big and powerful, and it may be time for a new trustbuster in the mold of Teddy Roosevelt to break up the monopolies.
"America's families are getting a raw deal, while oil companies make out like the robber barons of Roosevelt's time," Schumer said as he opened a hearing into the oil companies' market power at the congressional Joint Economic Committee.
Several witnesses pushed back at Schumer, saying the industry is well-regulated and competitive. Others, however, testified that increased concentration in various segments of the gasoline industry -- from oil production to transportation to refining to marketing -- have raised increased costs and reduced choices for consumers.
A wave of mergers -- 2,600 in the 1990s alone -- have "contributed to increases in market concentration in the refining and marketing segments of the U.S. petroleum industry," said Thomas McCool of the Governmental Accountability Office. A study of eight mergers in the 1990s showed concentration increased wholesale gasoline prices by between 1 and 7 cents per gallon, McCool said.
While the market for crude oil is truly a global one, the market for gasoline is extremely localized, said Diana Moss, vice president of the American Antitrust Institute. She said the FTC had found that about two-thirds of the local refining markets are highly concentrated, based on examinations of mergers. In the retail marketing segment, more than half of the local markets are highly concentrated and the remaining are moderately concentrated.
