The American Spectator

In the first week of May gasoline prices hit their highest average ever. A few days ago I was cheered when the cost of regular unleaded at my suburban Virginia service station edged below $3.00 a gallon. But then I flew out to California on business and found myself paying an extra 40 cents a gallon. Price-gougers! Corporate profiteers! Where is Congress when we need it?

Busy protecting the public, thank you very much. The gasoline price run-up in the aftermath of Hurricane Katrina caused the Bush administration and GOP-controlled Congress to seize the standard of consumer protection. The House passed a bill sponsored by Rep. Heather Wilson (R-N.M.) to “prohibit price gouging in the sale of gasoline, diesel fuel, crude oil, and home heating oil.”

Now Democratic legislators are leading the charge against Big Oil. For instance, Rep. Dennis Kucinich (D-Ohio), left-wing gadfly and presidential candidate, has written several oil refiners demanding to know how they planned to “remedy the disparity” between prices in California and elsewhere.

Kucinich, who chairs the Domestic Policy Subcommittee of the Oversight and Government Reform Committee, last month blamed the oil companies for playing “a role in raising the price of gasoline.” He announced: “Congress can no longer sit on the sidelines and watch as escalating prices continue to take a heavy economic toll on consumers and risk further harming the economy.”

Rep. Bart Stupak (D-Mich.) is pushing the Federal Price Gouging Prevention Act. Backed by 86 Democrats and three Republicans, the bill would make it a crime to “sell crude oil, gasoline, natural gas, or petroleum distillates at a price that is unconscionably excessive or indicates that the seller is taking unfair advantage [of] unusual market conditions (whether real or perceived) or the circumstances of an emergency to increase prices unreasonably.”

The legislation provides corporate penalties of $3 million a day for civil action and $150 million for criminal conduct, as well as a fine up to $2 million and ten years in prison for individuals. State attorneys general — usually ambitious governor-wannabes — also could bring civil actions. Let the lawsuits begin!

Sen. Ted Stevens (R-Alaska) has authored S. 94, which would punish price increases of an “unconscionable amount.” Senate Majority Leader Harry Reid (D-Nev.) has introduced a sense of Congress resolution (S. 6) which would encourage the passage of laws against such practices as “price gouging, profiteering, and market manipulation.”

If only the world was so simple.

IT WOULD BE NICE if the oil companies were charities, giving away their wares for free. But they aren’t. They are profit- making ventures. Their goal is to make money, and to do so they charge “what the market will bear,” as the saying goes, investing the proceeds to find and produce new sources of energy, also to be sold for a profit.

This shocks some people, who apparently believe that free, or at least cheap, gasoline is a basic human right. Yet attempting to maximize profits by charging people more rather than less is the way most businesses operate. Consider grocery stores, software developers, and book publishers: all cheerfully take advantage of market conditions to make money.

It gets even worse, however. Auto dealerships and airline companies engage in blatant “price discrimination” — charging different prices to different people based on their willingness to pay. Thus, passengers sitting side by side on the same flight may pay wildly different amounts. Unfair!

Then there are people who exploit rising prices. Most homeowners prefer to pocket their real estate gains instead of sharing the profits with buyers. Why are sellers entitled to keep money they did nothing to earn?

Yet the oil companies have long been particular targets of political ire, subject to demonization by activists, journalists, and politicians. During the “energy crisis” of the 1970s, Uncle Sam controlled prices, regulated supplies, subsidized alternatives, taxed profit “windfalls,” and otherwise meddled in the energy market.

The energy crisis essentially ended when President Ronald Reagan deregulated oil prices. Prices actually fell, gas lines became a distant memory, and America prospered.

Low prices in the 1990s left industry critics at the sidelines. But now international demand is climbing, as China and India rapidly industrialize. Amazingly, the Mideast has become even more unstable (a botched occupation will do that). Other major oil producers, such as Nigeria and Venezuela, have been roiled by political strife.