Congress Takes New Shot At The Pump

Worried about the political heat from high gasoline prices a day after Congress retreated from a plan that would have doled out $100 gas rebates, the House is preparing to vote on a bill that would impose criminal and civil penalties on any energy company caught price gouging.

The legislation, offered by Rep. Heather Wilson, R-N.M., calls for penalties of up to $150 million for refiners and other wholesalers and $2 million for retailers.

Senate Majority Leader Bill Frist, R-Tenn., under pressure from business leaders Tuesday, retreated from the plan that would have used a tax increase on oil companies and other businesses to fund a $100 gasoline rebate for millions of motorists.

The new anti-gouging bill comes as oil prices fell slightly Wednesday — below $74 a barrel — after the U.S. government released data showing that gasoline demand has been flat over the past four weeks and that motor fuel supplies are growing as refineries ramp up output.

But a high floor persists underneath oil prices amid nagging concern that Iran, a key exporter, could cut supplies because of international pressure to modify its nuclear program. Strong global demand, unrest in Nigeria and concerns about the next Gulf of Mexico hurricane season also have exerted upward pressure on prices.

House leaders said a vote on the anti-price gouging legislation was expected as early as Tuesday afternoon.

A separate bill would streamline the permitting process for refinery expansion or construction of a new refinery.

With gasoline topping $3 a gallon across much of the country, lawmakers have been scrambling to put together legislation aimed at soothing public anger, hoping to demonstrate that Congress was doing something about high energy costs.

Rex W. Tillerson, chairman and CEO of Exxon Mobil Corp., defended the company's record profits and high gas prices in an interview on NBC's "Today" show Wednesday.

"Obviously, the truth is we do not get together and manipulate prices. That would be illegal," he said, adding that there have been several past investigations of price collusion in the oil industry and none of them have found any evidence of collusion.

"The profit we earn is what the market gives us ... the price is set on the open market."

Despite Americans' sustained frustrations at the pumps, U.S. consumers are

In Great Britain, where gas is sold by the liter instead of by the gallon, it costs about $80 to fill the tank of a family car.

For years, Britons and others in Europe have paid much more for their gas and diesel than Americans — because European governments in general impose much higher taxes, MacVicar reports.

But like Americans, British motorists are facing yet another price hike in time for summer driving season, one that could bring prices even closer to $7 per gallon.

The run-up in gasoline costs in the United States follows a winter of record heating bills because of high natural gas and fuel oil costs.

The House action "will send a strong signal to those who would gouge consumers that we expected them to be prosecuted to the full extent of the law," House Majority Leader John Boehner, R-Ohio, said.

The surge in gasoline prices has placed intense pressure on the GOP. A new CBS News poll found that 74 percent of Americans disapprove of President Bush's handling of the gas crisis.

Even more think that the administration has not developed a good plan to get gas prices under control. In addition, 47 percent think that the Democrats would be more effective than the Republicans at keeping gas prices down. Only 20 percent thought Republicans would handle the situation better.

Congressional Democrats, meanwhile, chided Republicans for now pushing a proposal that Democrats tried to get through last fall after the run-up of gasoline prices in the aftermath of Hurricane Katrina. The House at the time passed a modest anti-price gouging measure that applied only to emergencies and had far weaker penalties than the proposal offered this time.

About half of the states have some statutes against price gouging, but enforcement and penalties vary widely. There is no federal law prohibiting price gouging, nor any agreement among the states on what constitutes price gouging.

State attorneys general have lobbied for a federal law against price gouging.

"Nationally there is no common definition of price gouging," Arizona Attorney General Terry Goddard told a Senate hearing in November. He said some states have laws that apply only to emergencies, while others allow up to 20 percent price increases.

The House bill requires the Federal Trade Commission to establish a definition of price gouging and imposes stiff civil and criminal penalties for violators who market gasoline, diesel fuel, crude oil and heating fuel.

Violations involving wholesale transactions face a possible civil fine three times their ill-gotten gains plus up to $3 million a day if violations continue.

Still, crude oil prices are about 40 percent higher than a year ago as a result of geopolitical tensions that are not likely to ease soon, analysts said.

"Political tensions in Iran, a refinery outage in Italy and supply disruptions in Africa (are) keeping the bulls running towards record values," said Vienna's PVM Oil Associates, predicting near-term price increases. PVM also said that investments by hedge funds, pension funds and other investors seeking to cash in on rising energy prices were also creating a self-fulfilling prophecy. PVM noted reports that America's biggest pension fund, the California Public Employees' Retirement System, planned to allocate as much as $1 billion into oil and other commodities by August.

But Iran continued to occupy center stage.

On Tuesday, an Iranian official reiterated the country's intention to keep enriching uranium, while U.S. Undersecretary of State Nicholas Burns said he believed European governments will agree to sanctions against Iran.