Bert Caldwell: Gas price gouging won’t be easy to prove

Americans smell more than gas fumes at the pump these days. They smell price gouging.

Congress has its nose to the wind, as well. Tuesday, the Senate Commerce Committee included anti-gouging language in a bill that will require U.S. automakers to substantially increase vehicle mileage. Sen. Maria Cantwell, D-Wash., submitted the language, the first to give the Federal Trade Commission authority to investigate gas prices “unconscionably” out of line with those determined by the daily tug-of-war in the marketplace.

Consumers have grown suspicious at a much lower threshold.

According to a new survey, more than 80 percent of Americans think the oil companies are engaged in price gouging on an ongoing basis. Reports of supply disruptions, refinery shutdowns or apprehension about unrest in one part or another of the petroleum-producing world apparently don’t wash as explanations for $60 fill-ups.

Prices are high, and there ought to be a law.

For those incensed every time gas prices increase — recently, every morning — the scope of the measure passed by the Commerce Committee may well be a disappointment.

Findings of price gouging could occur only where the President has declared an energy emergency caused by a disaster like Hurricane Katrina, which shut down 27 percent of U.S. crude oil production. The declarations would last 30 days, although they could be renewed. The declaration would be regional in scope.

Although another section prohibits market manipulation, the bill leaves it up to the Federal Trade Commission to determine what that might be. The FTC, as well as states’ attorneys general, would have the power to undertake enforcement actions against retail or wholesale suppliers of petroleum products.

A statement from Cantwell’s office says the language was deliberately narrow.

“The senator wanted a fair, comprehensive bill with specific definitions as not to affect market forces, or make gas stations afraid to do normal business or be wrongly accused of gouging,” it says. “The idea is this will act as a deterrent and boost consumer confidence.”

Meanwhile, Washington Attorney General Rob McKenna, the Governor’s Office, and the Department of Community, Trade and Economic Development are investigating gas and diesel pricing within the state, with a report on the first phase due in July.

Washington has no anti-gouging law, and McKenna’s office is not aware of any price-fixing.

“High prices, in and of themselves, are not illegal,” spokeswoman Kristin Alexander notes.

McKenna says his office is ready to take enforcement action, but cannot act without enough evidence of illegal activity. Even if the investigation fails to find any violations of Washington law, it will provide an opportunity to educate consumers about the workings of a petroleum market about as transparent as tar.

“A price-gouging law is not going to impact gasoline pricing on a day-to-day basis,” McKenna says. “People need to keep these two situations separate in their minds.”

Although Washington has looked into allegations of price-fixing several times in recent years, the state last filed charges against the oil companies in 1977. The case dragged on for 15 years before a $150 million settlement, that also resolved complaints by three other states, was negotiated.

Since then, state officials have focused their efforts on making sure mergers among the oil companies did not result in too much market concentration.

Consumers, justifiably or not, are losing patience.

A survey done by Opinion Research Corp. found 77 percent think the federal government should do more to control energy costs, and ease U.S. dependence on oil from the Mideast. Those polled say they would support a windfall profits tax on oil companies, even higher gas taxes, if the revenue was used to research alternative fuels. They also say vehicle mileage standards should be higher.

The majority of the responses were bi-partisan, although support for more action was predictably stronger among Democrats than Republicans.

There was Republican support for the fuel economy bill, which now goes to the full Senate. But how far lawmakers are willing to push Detroit, and how far consumers are really ready to push themselves, will not be clear until the House of Representatives acts.

Ultimately, hearings and investigations are unlikely to unmask any conspiracies except those between supply and demand. It stinks, but it’s reality.