Anti-gouging bill nears passage in California

| 8/28/2006

A bill awaiting final approval on the floor of the California Senate is intended to prevent price gouging by big oil companies – not just fuel stations.

Attorney General Bill Lockyer and Assembly Speaker Fabian Nunez offered the measure in response to prices at the fuel pump that have jumped by more than $1 per gallon since the first of this year.

The effort – AB457 – advanced from the Senate Appropriations Committee this month. If approved on the Senate floor, it would move back to the Assembly to sign off on changes. If those requirements are met prior to the end of the regular session Aug. 31, it would go to Gov. Arnold Schwarzenegger’s desk.

California law already authorizes the attorney general to investigate allegations of price gouging at the retail level in the state during emergencies declared by the governor or president. Retailers are prohibited from boosting prices for goods and services, such as food, medicine and fuel, more than 10 percent during a 30-day period after a declared emergency.

The bill would give the attorney general 60 days after an emergency to initiate an investigation into alleged price gouging. The entire fuel supply chain – including oil companies, refineries and fuel distributors – would be reviewed.

“If we suspect there’s price gouging by the oil companies going on, we need the tools to investigate and determine if we’re being ripped off,” Nunez, D-Los Angeles, said in a written statement.

An emergency could be declared when an “abnormal market disruption,” such as a cutoff of shipments by an oil producer, increases wholesale and retail prices. The governor now can act only during such circumstances like severe weather, earthquakes and acts of war or terrorism.

“The state’s anti-gouging law currently does not allow law enforcement to hold accountable oil companies that profiteer when consumers are most vulnerable,” Lockyer said in a written statement. “This bill fixes that defect.”

The bill also would allow the governor to declare an emergency, even if it happened elsewhere – such as a hurricane on the Gulf Coast – disrupting production.

Violators would face fines up to $10,000 and one year in jail.

California isn’t the only state this year to look into adopting anti-gouging protections. The governors in Vermont and Wisconsin have approved protections while their counterparts in Colorado and South Carolina vetoed similar efforts.