Preventing Price-Gouging of Gasoline after Natural Disasters

by rmalhotra November 10 2008, 15:59
Introduction


In 2007, in response to the public’s anger about the high cost of gasoline after the hurricane disasters, the House of Representatives drafted and passed the Federal Price Gouging Prevention Act (“FPGPA”), which reads in part:



“It shall be unlawful for any person to sell…during a period of an energy emergency, gasoline…at a price that


(A) is unconscionably excessive; and


(B) indicates the seller is taking unfair advantage of the circumstances related to an energy emergency to increase prices unreasonably.” [1]



To date, the Senate has not voted on the bill. While the victims of recent hurricanes were understandably angered with rising gasoline prices in the days following the disasters, the FPGPA would ultimately do these consumers more harm than good in terms of economic recovery because the language of the bill sets an unclear standard for law enforcement, merchants and consumers, and anti price-gouging legislation has been shown to cost consumers more money long-term. Rather, modification of federal and state legislation already in place would most effectively prevent the unfair manipulation of gasoline prices. [More]

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