Letter on the "Petroleum Consumer Price Gouging Protection Act"

May 7, 2007

The Honorable Daniel K. Inouye

Chairman

Committee on Commerce Science and Transportation
United States Senate

Washington, DC 20510

The Honorable Ted Stevens
Vice Chairman
Committee on Commerce Science and Transportation
United States Senate
Washington, DC 20510

Dear Chairman Inouye and Vice Chairman Stevens:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, strongly opposes an amendment expected to be offered by Senator Cantwell based on S. 1263, the "Petroleum Consumer Price Gouging Protection Act," should it be offered to legislation dealing with fuel economy standards that the Committee may address this week. This amendment purportedly addresses the concerns over the rising cost of gasoline, oil, and petroleum distillates, but would more likely exacerbate market conditions and reduce energy supplies.

This amendment proposes to levy excessive civil and criminal fines and imprisonment for sales that are deemed "price gouging," basing a finding of liability on the determination that fuels have been sold at an "unconscionably excessive price" during times of an "energy emergency." However, the Chamber believes that the imposition of such extreme penalties based on such arbitrary, capricious, subjective, and ill-defined standards would itself be unjust unconscionable.

Because of the subjective definition of price gouging, this amendment is more likely to exacerbate supply shortages as firms take a wait-and-see approach during energy emergencies rather than risk legal action by the FTC. In the past, when the government has imposed market limitations, ceilings, caps, or other restrictions, this interference with market mechanisms has not resulted in cheaper fuel, but in shortages of the very commodities that this legislation seeks to make more available.

Accordingly, I urge that you reject this amendment and, instead, strive to craft an intelligent, comprehensive energy policy that would truly benefit the nation. The Chamber looks forward to the opportunity to work with you to achieve this goal.

Sincerely
R. Bruce Josten

Cc: Members of the Committee on Commerce, Science, and Transportation