Bill spurred by gasoline prices would bar price-gouging

March 01, 1991|By David Conn | David Conn,Annapolis Bureau of The Sun

ANNAPOLIS -- The Persian Gulf war may be over, but the Annapolis war against oil profiteering has just begun.

Oil company executives trooped to this capital city by the dozen yesterday to battle a bill that would prohibit price-gouging.

The bill would make it a crime to charge "excessive prices" for petroleum products during times of "market disruption or state of emergency."

Exceptions are granted in cases where the seller can prove the higher price resulted from higher costs.

The bill, according to its sponsor, Delegate Gary R. Alexander, D-Prince George's, is a reaction to "the sudden, unexpected, unbelievable increase in the price of petroleum products at the pump" after the Iraqi invasion of Kuwait.

At the time of the invasion, Gov. William Donald Schaefer set up a joint legislative committee to study the almost instantaneous rise in gasoline prices.

That committee came up with HB 496, sponsored by Mr. Alexander, and a companion bill in the Senate, submitted by Finance Committee Chairman Thomas P. O'Reilly, D-Prince George's.

The governor's director of state energy programs, Gary Thorpe, told the House Economic Matters Committee yesterday that the administration would oppose the legislation.

Mr. Thorpe noted that recent studies by the Department of Energy, among others, found there was no evidence of price-gouging by oil companies.

"It seems that market economics, as imperfect as they are, worked fairly well," he said.

In fact, oil company representatives pointed out, prices in Maryland and around the country have fallen just as dramatically as their rise seven months ago.

"Right now we're actually paying less in Maryland than before the price hike due to the Iraqi invasion," not including the new federal gas tax, said Michael D. McDonald, executive director of the Maryland Petroleum Council.

"This can almost be looked at as an effort to repeal supply and demand," he said.

Some legislators were concerned about the ambiguity of some of the terms in the bill, such as "substantial change" in the price of a product and the definition of market disruption as "an actual or threatened shortage in the supply."

Mr. Alexander acknowledged that the bill isn't perfect. But he said that "if you never have a prosecution, having a law on the books may itself stop people" from charging excessive prices.

Lock Wills, president of the Southern Maryland Oil Co., in LaPlata, argued that the bill is an attempt to fix something that isn't broken.

Despite reports of record oil company profits in last year's fourth quarter, Mr. Wills said, some companies actually lost money, particularly those that do not hold supplies of crude oil.

"Our companies' prices skyrocketed, but our earnings were lower than in 15 years," said Mr. Wills, whose company sells gas to some retail outlets and home heating oil to residential consumers.

"It was the perceived threat of supply disruptions that drove up the price at the New York Mercantile Exchange," he explained. And when the perception of decreased supplies disappeared, so did the high prices. "That's going to happen as long as oil is traded as a commodity," Mr. Wills said.

One battle tactic that fared poorly before the committee was the suggestion that oil companies may bypass Maryland during times of market disruptions for fear of violating the price-gouging law, which carries a maximum penalty of one year in jail and a $50,000 fine.

State Comptroller Louis L. Goldstein pointed out that the industry advanced the same argument when the General Assembly passed a bill to prevent oil companies from owning retail service stations in Maryland.

"By God, they love Maryland," Mr. Goldstein said. "They love our dollars."

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