Price-gouging protections eyed in statehouses
March 17, 2023
State lawmakers from Maryland to California are reviewing rule changes that show little tolerance for merchants who take advantage of special circumstances, such as a power outage or hurricane, to jack up the price of goods, including fuel.
The National Conference of State Legislatures reports that 37 states have some type of price gouging ban. The laws in most of those states are triggered by emergency declarations.
A bill halfway through the Minnesota Legislature would prohibit retailers of an “essential consumer good or service” from engaging in price gouging during an “abnormal market disruption.”
House lawmakers voted 72-58 to advance a bill that covers situations that include a natural or man-made disaster, a public health emergency and a national or local emergency. Essential commodities referenced in the protection include food, water, fuel, and transportation.
Retailers would be prohibited from charging “unconscionably excessive prices” for essential goods or services that exceed 30% within a seven-day period.
The Minnesota Attorney General’s Office would investigate alleged violations. Violators would face fines up to $10,000 per sale or transaction, with a maximum daily penalty of $25,000.
HF6 has moved to the Senate for further consideration.
Rep. Zack Stephenson, D-Coon Rapids, said the change is necessary because Minnesota does not have any protection from price gouging.
“Unlike almost every other state in the country, Minnesota does not have a law against price gouging during an emergency. Our citizens are vulnerable to exploitation and have no recourse when it occurs,” Stephenson said on the House floor. “This bill would make it illegal to price gouge during a disaster declared by the governor.
California Gov. Gavin Newsom wants state lawmakers to pass price gouging rules for oil companies.
In November, the governor opened a special session to address concerns about high fuel prices. The legislation pursued by the governor would authorize a price gouging penalty on oil companies.
Newsom said a spike in fuel prices last fall resulted in record refiner profits of $63 billion in 90 days.
“Big oil is ripping Californians off,” Newsom said in a previous news release. “A price gouging penalty is needed to hold them accountable for profiteering at the expense of California families.
Part of the problem
On July 1, the state increased the 51.1-cent excise tax collected on gas purchases by 2.8 cents per gallon to 53.9 cents. The 38.9-cent diesel rate increased by 2.1 cents per gallon to 41 cents.
California’s average diesel price is about $1.17 above the national average for a gallon of on-highway diesel fuel, according to the U.S. Energy Information Administration. The state’s average gas price is about 95 cents above the national average for a gallon of regular gas.
Critics say California government has contributed to the high fuel costs. They cite the legislature and the governor’s refusal to put a moratorium on the state’s fuel taxes.
California rules link taxes on gas and diesel to inflation adjustments each July.
To potentially make matters worse, critics add that imposing a new tax on oil and gas suppliers would result in fuel prices climbing even higher.
The Senate Energy, Utilities, and Communications Committee recently held a hearing on the issue.
Time has run out on two Maryland bills that addressed price gouging.
The bills called for prohibiting the sale of essential goods and services for a price of 10% or more above the highest price of purchase 60 days before an emergency declaration and four days before a state of emergency. Essential goods would include food, fuel, water, and more. Additionally, the governor would be able to designate any other goods or services as essential.
Shelly Martin of the Maryland Attorney General’s Office testified during a recent committee hearing the state found during the pandemic that price gouging was occurring along the supply chain. She said it was not the end retailer doing the price gouging.
HB775/SB542 sought to allow the attorney general’s office to look at wholesalers or distributors when price gouging concerns arise.
Both bills remained in committee at a deadline to advance, essentially killing them for the year.
Concern about price gouging is also the topic of a New York Assembly bill. State law already prohibits price gouging of goods and services.
Sponsored by Assemblywoman Nily Rozic, D-Fresh Meadows, the bill is intended to clarify that “vital and necessary goods” include fuel, energy, and transportation goods and services.
Additionally, a provision would be added to statute to require the state’s attorney general to publicize regulations that would obligate “periodic price disclosure by all actors in the supply chain” for gas, diesel, crude oil, or otherwise, that are sold in or into the state.
“Requiring periodic disclosure of the prices charged at each stage of the supply chain for oil and gas in New York by every actor in that chain, rather than simply the spot prices charged at the pump or at the terminal, permits rapid detection of both unconscionably excessive prices and the actors behind those unconscionably excessive prices after abnormal disruptions of the market,” a bill memo reads.
The bill, A450, is in the Assembly Consumer Affairs and Protection Committee.
A Pennsylvania bill introduced this month focuses on fuel price gouging.
Sponsored by Rep. Ryan Bizzarro, D-Erie, the bill would prohibit price increases within 24 hours of a previous increase.
Bizzarro wrote in a memo to lawmakers the legislation would also “outlaw unconscionable increases in times of emergency,” and permit the attorney general to investigate and prosecute fuel price gouging.
“Pennsylvanians are in pain at the pump. Prices have skyrocketed because multinational companies are taking advantage of the national conversation around supply chain disruption and inflation to charge unconscionable prices.”
AAA reports the average price of diesel in Pennsylvania is $4.80 – about 48 cents above the national average. The average gas price in the Keystone State is $3.61 – about 15 cents above the national average.
HB135 is in the House Consumer Protection, Technology and Utilities Committee. LL