The gasoline shortage in Maricopa County and the higher prices that resulted for limited supplies have prompted much debate among state legislators over price-gouging legislation, environmental waivers and what to do to prevent such a situation in the future.

“It scares the fire out of me,” said Rep. Ray Barnes, R-Dist. 7, referring to suggestions by Governor Napolitano and Attorney General Terry Goddard that the Legislature should consider a bill to define price gouging and provide penalties for it.

“How do you define all the situations that could come up?” Mr. Barnes asked.

Mr. Goddard said some states have defined price gouging as 20 per cent to 25 per cent above the wholesale price, and Sen. Carolyn Allen, R-Dist. 8, said she is studying price-gouging statues from other states.

She warned, however, that such a law in Arizona might be an over-reaction to the gas shortage, adding that price-gouging legislation could lead to “unintended consequences.”

Mr. Goddard said his office has received hundreds of complaints about escalating gas prices during the shortage, some more than $4 per gallon.

“We should have a price-gouging law,” Sen. Jay Tibshraeny, R-Dist. 21, said, “because people have been taken advantage of, and that shouldn’t be tolerated.”

Mr. Tibshraeny said proposals for such a law should not be considered partisan.

“It will be controversial because a lot of people, especially my Republican colleagues think it’s an anti-Republican, anti-business thing, but it’s not. It’s a pro-citizen thing, and we need to do something.”

Rep. Wally Straughn, D-Dist. 15, said a balanced approach should be taken to price-gouging legislation.

“We need to consider legislation to prevent a few greedy business people from taking advantage of us during emergency situations,” he said. “We also need to carefully balance controls with a capitalist economy to avoid stifling commerce.”

Rep. Chuck Gray, R-Dist. 19, said the gas pricing issue is overblown.

“The few isolated cases of price gouging that occurred were sensationalized by the media and do not reflect the majority of retailers who acted responsibly,” he said. “Even asking this question of legislators is making an issue out of a non-issue. Government is great at making small problems become massive. Have faith in the free market . . .”

To no avail, the state has asked the federal Environmental Protection Agency to eliminate its requirement that Maricopa County sell gas that includes MTBE, a chemical that contains oxygen to help the gas burn cleaner. But in the meantime, the EPA on Aug. 19 granted a 30-day waiver on the regulation for “Phoenix Blend” gasoline, freeing up shipments of conventional gas to tank farms and retailers to help alleviate shortages.

Prior to the waiver, Sen. Jim Weiers, R-Dist. 10, said he was going to call fellow lawmakers to see if there was enough support to petition the governor for a special session of the Legislature to deal with the MTBE requirement. (For the Legislature to call a special session requires the signatures of at least two-thirds of the members of each house, and it has only been done once in the state’s history.)

“If I had the power,” Rep. Linda Gray, R-Dist. 10, said before the EPA waiver, “I would call a special session immediately to waive this Phoenix Blend requirement during an emergency such as this.”

Sen. Robert Blendu, R-Dist. 12, called the MTBE requirement “an example of a federal mandate that poisons the water supply.”

“Even California is backing away from this,” he said.

Senate President Ken Bennett, R-Dist. 1, said, “I don’t understand why it takes a different blend than California to clean the air.” Mr. Bennett asked, “Have we gotten too cute for ourselves?”

Senate Majority Leader Jack Brown, D-Dist. 5, said he supports a “temporary” waiver of the MTBE requirement, and Rep. Clancy Jayne, R-Dist. 6, said the Phoenix Blend should become the “Western States Blend so all Western states use the same formula.”

State Refinery

Many legislators interviewed during the week of Aug. 18 said Arizona should look at locating a refinery in the state as one means to help prevent future gas shortages.

“It’s Business 101,” Mr. Barnes said. “You never single-source any commodity.”

Mr. Blendu said “environmental extremists” have prevented the construction of refineries in Arizona.

Rep. Ken Clark, D-Dist. 15, said Arizona could benefit from a refinery, however, “We should create incentives in the market for people to purchase hybrid vehicles. The alternative fuel debacle was the result of very poor lawmaking and a serious misapplication of state funds. The result is that we are discouraged for many years to come from taking any positive steps to reduce our use of fossil fuels and/or clean up our air.”

“I say let’s think outside the box,” said Rep. Ted Downing, D-Dist. 28, “and open up new supply lines. This incident has shown us the dangers of depending so much on East and West Coast lines. Rather than a refinery, we need to lock arms and assure Arizona benefits by improving rail and pipeline services south to an expanded Guauymas (Sonora, Mexico) port.”

Role of Government

Asked about the role of state government in the gas shortage, Mr. Bennett said legislation or even a state agency to oversee gas supplies are not the answers.

“I’m a strong believer in a free market,” he said. “One of the responsibilities of state government is . . . to feed people, but we don’t have a state Department of Supermarkets to make sure there’s enough food.”

Sen. Mark Anderson, R-Dist. 18, summed up the gas shortage experience this way: “Like the power outage back East, we learn not to take our infrastructure for granted.”—