Stengthening the state's price gouging laws: A solution in search of a problem

Two Alabama pols are promising to introduce legislation to strengthen the state's law against gasoline price-gouging:

(Huntsville Times) MONTGOMERY - Gasoline prices in the state haven't retreated much since Hurricane Ike hit Texas, but supply is more of a critical issue now, a spokesman for AAA of Alabama said Monday.

Meanwhile, Democratic and Republican state senators said they will sponsor legislation in 2009 to strengthen consumer protection against price gouging. ...

State Sens. Roger Bedford, D-Russellville, and Scott Beason, R-Gardendale, each have proposals they will sponsor in the 2009 legislative session.

"What we saw happen was truly atrocious," Bedford said. "Price gougers were determined to reap a profit on the fears of our Alabama families and individuals."

Bedford's legislation would update the Unconscionable Pricing Act, which was passed after Hurricane Opal did substantial damage in Alabama in 1996.

That law made price gouging illegal in the state if the price was 25 percent above an "unconscionable level," but Bedford wants to lower that to 15 percent.

He also proposes increasing the fine for violations from $1,000 to $5,000 per offense and making repeat offenders subject to a Class C felony.

Ingram said AAA supports Bedford's legislation, adding the current law "needs to have a little more teeth to it."

Beason's bill would prevent fuel retailers and suppliers from price gouging prior to a declaration of a state of emergency.

His proposal would give the governor the authority to call a three-day "state of preparedness" to protect Alabamians from fuel price gouging when the state is indirectly impacted by natural disasters in other states. The attorney general would also be given the power to prosecute violators during this period.

"There needs to be a mechanism in place to prevent the artificial inflation of fuel prices that cause consumer panic," Beason said. "The urgency caused by the oil companies creates a self-fulfilling prophecy of fuel shortages and even higher prices."

A better solution would be for the government to step back and allow the market to work its magic. The Alabama legislature should simultaneously repeal both the Unconscionable Pricing Act, which places a ceiling on gasoline price increases, and the Motor Fuel Marketing Act, which forbids retailers from selling gas below cost.