How a new law could drain drivers’ wallets
May 27, 2007| By Nathaniel Ward
Just in time for the holiday weekend, when millions of Americans are expected to hit the roads, the House of Representatives has passed a law prohibiting “price gouging” at the gasoline pump. (“Price gouging” is the supposed setting of “unfair” prices, however that’s defined.) Liberals claim that such regulations will help ease high prices, but as Heritage energy expert Ben Lieberman explains, such rules would “backfire and exacerbate the pain at the pump.”
Laws against “price gouging” would have the same effect as price controls on gasoline—like those in the 1970s that resulted in shortages and long lines to fill up. “While the definition of price gouging is subjective and vague, the penalties would be severe,” Lieberman says. This sort of regulation would serve as a “chilling effect” on the energy industry and reduce supply—which would have the effect of raising prices at the pump.
Nathaniel Ward is the Editor of MyHeritage.org—a website for members and supporters of The Heritage Foundation.