Gasoline prices that have reached $2 a gallon for the second time in less than a year demonstrate the need for a state anti-gouging law, Attorney General Terry Goddard says.

Mr. Goddard appeared before the Senate Government Committee on March 2 to promote passage of S1112, which would allow the governor to declare an emergency in the availability of some commodities, including gasoline, food and water.

Mr. Goddard told the Senate Government Committee that his office received more than 1,000 complaints about gasoline prices last summer. The Attorney General’s Office verified instances in which gasoline at many retailers rose to as much as $2.40 a gallon, and in some cases was going for nearly $5 a gallon. The spike in prices began soon after a rupture of the Kinder Morgan pipeline that supplies much of the gasoline to the state.

But the first sponsor of the bill and the chairman of the Government Committee, Sen. Jay Tibshraeny, R-21, didn’t declare the bill dead for the session, but did say he wants to work with a governor’s task force on the issue before advancing legislation. There is no anti-price gouging bill in the House.

Mr. Tibshraeny is a member of the Governor’s Essential Services Task Force, organized in the aftermath of last summer’s steep price increases in gasoline. The task force isn’t expected to issue a report until at least May, probably after the current session is expected to end.

In a statement following the committee meeting, Mr. Goddard nonetheless urged lawmakers to advance the bill in this session.

“We have more work to do and we are not giving up, because Arizona needs this measure,” Mr. Goddard said. “This legislation gives us an important tool to protect Arizona consumers and businesses from the price gouging tactics of those who supply essential products or services – like gas, food or water to the state, when the governor declares an emergency.”

Bill Gives Governor Emergency Power

According to the Senate research staff’s fact sheet, the Supply Emergency Trade Practices bill would give the governor the authority to “declare a supply emergency if there is a statewide or regional shortage or threatened shortage of a product or service that is essential to the health, safety and welfare of the people of this state due to an abnormal market disruption.”

During the period of the declared “supply emergency,” no producer, supplier or retailer could sell a product or service “at a price that exceeds 110 per cent of the price that it was sold … in the regular course of business 30 days immediately before the declaration of the supply emergency.” That would allow the price to increase no more than 10 per cent. The measure also would prohibit a net profit in excess of 10 per cent “above normal net profits for the product or service.”

Violations could result in the suspension of a business’s license to operate for 30 days, and forfeiture of profits from violations to the state.

Governor: Feds Should Deal With Current Problem

Governor Napolitano said in her weekly meeting with the news media March 2 that rising gasoline prices are part of what she called “a natural phenomenon out of an industry where we cannot get transparent information about why prices go up has high as they do as quickly as they do and come down so slowly.”

The current price hikes need to be dealt with by the federal government, Ms. Napolitano said, but “I think we need a gouging bill,” referring to what some dealers charged for gas during the shutdown of a Kinder Morgan pipeline from Tucson to Phoenix last summer.

“A few retailers took undue advantage of that situation,” Ms. Napolitano said. “That’s a gouge. We could have used a narrowly written law last summer.”

Lobbyist: High Prices Force Conservation

Susie Stevens, a lobbyist for the Western States Petroleum Association, said that rising prices have the effect of forcing consumers to change their behavior – by driving less or by carpooling, for examples – and that those changes are the best way to deal with rising prices. With limits on how high prices could rise, consumers would have no disincentive to change their behavior.

Michelle Ahlmer, executive director of the Arizona Retailers Association, said an anti-gouging law would “taint” businesses that are examined for alleged price gouging. Even if cleared later, the negative publicity about any investigation could be sufficient to kill a business, Ms. Ahlmer said. —