Conservative groups are firing off warning shots over legislation to crack down on gouging in the gasoline market—even as Democrats aim to capitalize on the spike at the pump.
Those groups, including the Club for Growth and Heritage Foundation, are sending a clear signal to Republican allies on Capitol Hill: Stick to your free-market guns.
Some signs are emerging that the conservative groups may be onto something. During previous spikes, Republicans and Democrats alike backed price-gouging legislation and bills to allow antitrust suits against the Organization of the Petroleum Exporting Countries.
“Price-gouging legislation can be pretty dangerous stuff,” said Nick Loris, an energy economist at the Heritage Foundation. “I would strongly urge policymakers not to do anything that tries to adversely impact the role that speculators play or put price caps or some sort of cap on what the price of oil would be.”
Gas prices are pocketbook priorities, and Americans travel much more in the summer months, kicking off with Memorial Day weekend. The midterm elections follow in less than six months.
Nationally, prices averaged $2.92 per gallon at the beginning of the week—up about 56 cents from Inauguration Day 2017, according to the Energy Department. Most analysis points to global instability as the culprit. The U.S. withdrawal from the Iran nuclear deal is likely to remove Iranian crude from the global market, a prospect that will—and already has—increased prices.
Meanwhile, Venezuelan production declines and voluntary cuts from OPEC members, most importantly the Saudis, are likely contributors. Democrats are calling on President Trump to pressure Saudi Crown Prince Mohammad bin Salman and other OPEC leaders to ramp up production in order to scale back prices, an awkward position for a party that prides itself on trying to shift the global-energy portfolio from carbon-emitting, climate-change-inducing fossil fuels.
But Senate Minority Leader Chuck Schumer and other Democrats, following an event Wednesday at a gas station near Capitol Hill, are also urging Trump to direct the Federal Trade Commission, the Commodity Futures Trading Commission, and the Justice Department “to exercise vigorous oversight over oil markets.”
Price gouging, according to some who say it is taking place, takes various forms, from Wall Street speculation that drives up crude prices to increases at the pump during disasters. But the practice revolves around manipulation of the market that leads to artificially high gas prices.
In 2006, amid a gradual but dramatic spike similar to the one taking place now, the House Republican majority overwhelmingly passed legislation to prescribe civil and criminal penalties, including prison time, and force FTC rules on gouging. That year, the FTC concluded that no price-gouging took place in the wake of Hurricane Katrina.
Similar Democratic bills garnered big support, including more than a quarter of the Republican minority, in 2007 and 2008.
None of those made it to the president’s desk. So far, no gouging bills are on the docket, but some Republicans are hinting at potential support.
“Obviously, we will look at it,” Rep. Robert Aderholt said. “If [the price] rose much higher, then I think it’s something we’d have to look at.” Aderholt signed onto the 2006 and 2007 bills.
Gas prices surpassed $3 in 2005, then hit $4 in 2008 before dropping dramatically. They climbed back up to $4 in 2011 and hovered between $3 and $4 through 2014. Another decline ensued, after which prices steadily climbed from early 2016 until today.
Despite the threat to bottom lines for millions of Americans, conservative advocates are pleading for Republicans to keep their hands off the market.
“Once gas prices go up, which they naturally do from time to time, you’re going to see politicians on both sides of the aisle who will suddenly want to criminalize price-gouging and suggest that this is all manipulation by oil companies or gas stations in order to purposely steal money from honest consumers,” said Andy Roth, vice president for government affairs at the Club for Growth.
“It’s clearly politically motivated. And policy that is motivated by politics is usually a bad idea. … If prices keep going up, I’ll bet a cup of coffee that that’s what’s going to happen,” he added.
But many Republicans are signaling they won’t go down that path.
“It is a huge pocketbook issue, no doubt,” House Energy and Commerce Chairman Greg Walden said. “It’s something we’ll watch to make sure there aren’t things that are going on that aren’t market forces. But having lived through a few of these cycles before, it seems like the FTC or somebody comes in, investigates, and says, ‘Oh, it’s market prices and constrictions in supply and demand,’ and there’s not a ton you can do about that other than make more supply available on the market.”
Increased global production typically decreases prices. And Republicans under Trump are charging ahead with plans to increase drilling access. A provision to open up a portion of Alaska’s Arctic National Wildlife Refuge passed alongside the tax-cut package late last year, and the Interior Department has proposed opening up nearly the entire East and West coasts to drilling.
“This is yet one more good reason why more production coming out of a place like Alaska is going to be helpful. We’re doing our bit,” Senate Energy and Natural Resources Chairwoman Lisa Murkowski said. “We’ve got an awful lot that we can contribute.”
In the meantime, Democrats are using the price spike as a political cudgel, blasting Trump and Republicans for slashing tax cuts for corporations and higher-income brackets, while allowing gas prices to bear down on low and middle-income Americans.
“Republicans are proposing to take away health care [and] slash the social safety net for middle-class families, but they’ve created a massive welfare system for big oil,” Senate Foreign Relations ranking member Bob Menendez said during the gas-station event. “You see it in the billions of dollars of tax subsidies that have gone to Exxon, BP, and Shell—some of the most profitable corporations in the world.”
That gas station was selling gas for $3.89, 83 cents above the D.C. average, according to the American Automobile Association.
The Democratic National Committee is also aggressively pushing a campaign to highlight the spike. A release from the group on Tuesday highlighted some choice tweets from Trump’s Twitter feed.
“Gas prices are at crazy levels—fire Obama!” Trump tweeted a few weeks before President Obama’s reelection in 2012. Americans paid $3.69 on average at the pump at that time.