Anti-Gouging Bill Targets Big Oil Firms

California needs stronger laws to prevent price-gouging by big oil companies, not just service-station owners, top Democratic officials said Thursday.

Prosecutors should get greater power to investigate oil refiners and wholesalers when pump prices rise much faster than the cost of crude oil, Assembly Speaker Fabian Nunez (D-Los Angeles) said. He is sponsoring legislation that would make it easier for the governor and attorney general to counter market manipulators.

Nunez and Atty. Gen. Bill Lockyer touted the bill at a news conference near a Union 76 gas station.

The bill is expected to move fairly easily through the Democrat-controlled Legislature, despite strong opposition from the oil industry.

“This is a solution in search of a problem,” said Anita Mangels, a spokeswoman for the Western States Petroleum Assn. A number of investigations, most recently by the Federal Trade Commission, show “there’s no gouging going on,” she said.

But near-record high gas prices are “hurting our families” and “threatening to derail California’s economy if we don’t get our arms around the problem,” Nunez said. He noted that statewide average prices were up nearly $1 a gallon from a year ago and major refiners’ profits had soared as much as 294% in the first quarter of the year compared with the same period in 2005.

Under the Nunez bill, the attorney general could initiate an investigation of alleged price gouging within 60 days of the governor declaring a state of emergency.

He could call the emergency if an “abnormal market disruption,” such as a cutoff of shipments by an oil producer, sends wholesale and retail prices soaring. The governor now can act only in the event of a natural disaster such as a hurricane or a man-made calamity such as a war.

“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. “This bill fixes that defect.”

Those fixes, for the first time, could “attack the severe price spikes we see every summer driving season that aren’t justified by increased crude costs or refining costs,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

High gasoline prices are caused by the international crude oil market, steep California taxes and demands for low-polluting fuels, oil trade group spokeswoman Mangels said.