Big oil and gas companies continue to make historic profits as ordinary consumers bear the brunt of rising gasoline prices. Lawmakers were alarmed by the stark contrast between the industry’s revenue and the struggle driven by consumers — and passed the U.S. House of Representatives on Thursday — bill That would make predatory price hikes illegal and expand the powers of federal investigations into alleged price gouging.this Consumer Fuel Price Fraud Prevention Act Designed to help ease rising natural gas prices; national average gas price Up to $4.45 per gallon Last week – an all-time high in the US.Some states, like California, have seen gasoline prices up to $6 per gallon.
This led to an unprecedented first quarter for oil and gas companies.According to an analysis by the regulator Accountable.US, the top 21 companies in the country are in $41 billion Profits in the first quarter of this year increased by an average of $1.2 billion per company over the same period last year, the report said. Cash-rich companies like Devon Energy are rewarding shareholders with “record” returns. Congress has certainly taken notice.
“I am a proud capitalist and the fuel prices we are experiencing are the result of a market crash,” said Rep. Katie Porter, D-Calif., was one of the original co-sponsors of the Consumer Fuel Price Gouging Prevention Act. “Big oil executives are bragging to shareholders about households who are driving up prices. They are deliberately keeping supply low to make record-high profits, squeezing households in the process — and our entire economy.”
House lawmakers passed the bill by a vote of 217 to 207, with zero support among Republicans. Four moderate Democrats — Rep. Lizzie Fletcher, Jared Golden, Stephanie Murphy and Katherine Rice — opposed partisan lines and voted against the bill.
“The Consumer Fuel Price Fraud Prevention Act will not fix high gas prices at gas stations and has the potential to exacerbate the supply shortages facing our nation, leading to worse outcomes,” Fletcher said. wrote in a statement. “For these reasons, I voted against this legislation.”
Even some Democrats who eventually backed the bill expressed concern about it. “It’s just, you know, we seem to treat oil and gas like Big Tobacco, and sometimes they’re unjust targets,” said Texas Rep. Vicente Gonzalez.
In addition to vetoes by four Democrats and broad Republican opposition, the legislation has faced opposition from powerful industry lobby groups, including the American Petroleum Institute and the National Association of Manufacturers.
The fuel price gouging bill could face an uphill battle in the Senate, where Democrats hold a narrow majority, as oil and gas companies resist regulation and have little support from Republicans.
What does the Fuel Price Gouging Act really do?
The Consumer Fuel Price Gouging Prevention Act consists of several main parts: First, the legislation would allow the President to declare an energy emergency for up to 30 days, but that declaration could be extended.
During an energy emergency, it is illegal for anyone to sell consumer fuel at prices that are “unreasonably high” or suggest exploitative practices. The bill would also expand the FTC’s powers to investigate and address potential fuel price gouging by large corporations (defined as those with $500 million in annual wholesale or retail sales in the United States). Under the bill, state authorities would be given enforcement powers to fight fuel price gouging through civil court proceedings.
The legislation aims to address record U.S. natural gas prices, which some lawmakers and regulators claim are largely made by oil and gas companies. Like everything else on the market, the cost of a gallon of gasoline is affected by supply and demand in the market. Major events such as the COVID-19 crisis, Russia’s invasion of Ukraine, and supply chain disruptions may affect the supply and demand of certain commodities in the market.
However, it is still debated how much the prices of certain commodities are affected when market variables change.Have no legal definition What exactly constitutes price gouging in the US. Oil and gas companies such as Chevron and Shell could take advantage of market instability to unduly inflate gas prices while limiting production to boost profits, which in turn hurts consumers.
It’s hard to know if how much of an increase in oil and gas production — demanded by lawmakers like Rep. Porter — will be enough to alleviate the current price gouging problem, or even if it would help solve the gas crisis at all. Still, Republicans argue that targeting the industry is not a viable solution, and that increasing domestic production is the way to ease the pump. But Republican lawmakers may not get their wish for a variety of reasons, including boycotts by oil and gas companies.A sort of polls A March study by the Federal Reserve Bank of Dallas found that many companies do not expect to ramp up production anytime soon. The Federal Bank of Dallas covers the 11th Federal Reserve District, which includes high oil-producing states such as Texas and New Mexico.
On average, the Dallas Federal Reserve survey found that oil and gas companies operating in the region expect crude prices to hit $93 a barrel by the end of the year, with some even predicting prices as high as $200 a barrel. At the time of the survey in March, crude oil prices had reached $100 a barrel. Nearly 60 percent of corporate respondents to the survey cited “investor pressure to maintain capital discipline” as the main reason oil companies are not drilling more despite soaring natural gas prices. Lawmakers naturally took notice.
Price gouging is anti-capitalist. Big Oil is threatening our entire economy by keeping supply low and raising oil prices well above inflation to meet Wall Street’s demands.
Oil and gas executives *literally* acknowledged this. (thread ⬇️) pic.twitter.com/HosywUxU8Y
— Rep. Katie Porter (@RepKatiePorter) May 19, 2022
“Oil majors are threatening our entire economy by keeping supply low and pumping up oil prices to satisfy Wall Street well above inflation,” Porter tweeted ahead of the House’s approval of the fuel price gouging bill. “Oil and gas executives *did* admit it.”
Analysts believe that the best indicator of inflation is the Consumer Price Index (CPI), which measures changes in the prices of goods and services that the average consumer frequently buys. The U.S. Bureau of Labor Statistics found that the consumer price index rose 8.3% in the past 12 months through April.Of all categories that measure CPI, fuel oil prices Increase The biggest gain so far, jumping more than 80% over the past 12 months.
But high inflation isn’t just affecting gasoline prices — the housing market and food and grocery prices have also seen spikes.The knock-on effect can have a huge impact on the average American, especially low-income family People with limited transportation options and already tight family budgets.
“This inflation is a real problem. When you’re paying twice as much to fill up the gas tank and twice as much for everything, you have to say to yourself, ‘Okay, I really need to buy it at King’s. everything? [Food Market]?'” A shopper, who now splits her purchases among multiple stores to get the cheapest price, Tell New York Times.
Will the Fuel Price Gouging Act really make a difference?
Opponents of the bill argue that price gouging is already illegal in most states, rendering the legislation moot. Instead, they argue that lawmakers should focus on increasing domestic energy production and improving the country’s competitive advantage in global markets.American Petroleum Institute Call The bill is “misguided” and put on label It’s a hollow attempt by Democrats to influence voters ahead of November’s midterm elections. Other industry groups feel similar to many Republicans, who claim their concerns relate to domestic production and energy security.
“[Combatting price-gouging] This starts with opening up our diverse resources on federal lands, approving responsible exploration and production, supporting sustainable licensing, and rapidly building more energy infrastructure,” said Rachel Jones, vice president of energy and resources policy for the National Association of Manufacturers. , wrote Respond to the bill in a letter to House leadership.
According to AAA, the main factor driving high natural gas prices nationwide is tight oil supply and insufficient market demand.
Company spokesman Andrew Gross said in a statement statement“Even during the lull between spring break and Memorial Day, the annual seasonal drop in gasoline demand usually helps lower prices, but this year has had no effect.”
Supporters of the bill argue that corporate profiteering by oil and gas companies would inherently worsen gas prices. But there is little consensus among experts on the effectiveness of the fuel price gouging bill. Some believe it may even have a negative impact on the market.
“There is no material prospect that fraudulent legislation could have any material impact on inflation pressures in any lasting way,” said Lawrence Summers, a former Treasury secretary in the Clinton administration. Tell Bloomberg Television interviewed last week. Such legislation has the potential to “cause and create all kinds of shortages” and undermine companies’ efforts to increase supply, he added.
Debate over whether the fuel price gouging bill is enough to effectively address high U.S. gas prices could be futile if the bill does not win the Senate, where Democrats have been approving it. cannot pass Important legislative projects in the past have often failed to meet the 60-vote threshold needed to end the obstruction and push for legislation.
But this may not be the last time we hear anti-price gouging legislation as lawmakers try to find a way to combat the recession.Earlier this month, U.S. President Joe Biden Call Ask the FTC and state attorneys general to fight price gouging as part of regulation Baby formula shortage in the country, according to reports of unfair practices by individual dealers. He could also emulate oil and gas.