Gasoline Price Increases: Federal and State Authority to Limit “Price Gouging”

Fluctuations in gasoline prices, including those resulting from crude oil supply chain concerns related to international events, have renewed focus on the role of the government in discouraging gasoline “price gouging.” Price gouging is a phrase commonly used to refer to sellers increasing prices to take advantage of certain circumstances that trigger significant decreases in supply without a corresponding decrease in demand, including emergencies. Other bills have sought to enhance protections against “price fixing,” whereby sellers collude to raise prices beyond levels dictated by market conditions. Past federal legislative efforts to address gasoline price gouging and price fixing would have barred certain commercial practices and mandated studies of gasoline pricing. Although federal antitrust laws restrict the coordinated manipulation of a market, no federal statute specifically addresses price spikes for retail gasoline that result from the non-coordinated behavior of individual sellers. A majority of states have enacted statutes to curtail price gouging for certain critical goods and services, including gasoline, during emergencies. Some of these statutes bar pricing during emergencies that is considered to be “unconscionable” or “excessive” or otherwise violates a subjective standard. Other state statutes place a cap on prices during periods of emergency based on percentage increases from prices charged prior to the emergency for specific goods and services. These state statutes generally allow sellers to show as a defense that the price increases are the result of increased costs rather than simply changes in the marketplace. Military operations against Iran have impacted oil shipping through the Strait of Hormuz, creating supply constraints and resulting in increased gasoline prices. This has renewed congressional interest in price gouging and other price manipulation practices. Multiple bills introduced in the 119th Congress would explicitly address price gouging for retail gasoline or other practices that might impact retail pricing during emergencies at the federal level. Some bills that would place limits on pricing during emergencies resemble restrictions found in state statutes, while other bills take a different approach.