[Congressional Record Volume 151, Number 110 (Wednesday, September 7, 2005)]
[Senate]
[Pages S9736-S9737]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN:
  S. 1629. A bill to provide the President with authority to 
temporarily freeze the price of gasoline and other refined products; to 
the Committee on Banking, Housing, and Urban Affairs.
  Mr. LEVIN. Mr. President, today I am introducing legislation to give 
the President the temporary authority to freeze the price of gasoline 
and other petroleum products at their levels just prior to the 
devastation wrought by Hurricane Katrina on the Gulf Coast of the 
United States. This authority would expire once supplies of these 
products have been restored to their pre-hurricane levels.
  Our topmost priority, of course, must be to provide immediate aid 
directly to the victims of this immense tragedy. Hundreds of thousands 
of people have been driven from their homes. Thousands may have died. 
The destruction along the Gulf Coast is extensive, and much of New 
Orleans is still submerged. We must continue to place the highest 
priority on providing food, clothing, and shelter for the people 
displaced by the hurricane.
  At the same time, we must start to take measures to address other 
consequences of the damage caused by Katrina. Katrina has damaged a 
number of oil refineries along the Gulf Coast, knocking out about ten 
percent of our daily gasoline production. Current estimates are that it 
will take several months before production is restored to pre-hurricane 
levels.
  Gasoline prices have skyrocketed in the wake of Katrina. Last Friday, 
the average price for a gallon of regular gasoline in Michigan reached 
$3.13. Today the national average is about $3.05 per gallon. These 
prices are record highs in the United States. Even adjusted for 
inflation, these prices are higher than they were during the energy 
crises of the 1970s, when high energy prices helped push the economy 
into a recession.
  For most people, driving the car each day is not a luxury but a 
necessity. Millions of Americans depend upon affordable gasoline and 
other petroleum products for essential goods and services, including 
transportation to and from work, schools, grocery stores, and medical 
care; home heating oil; jet fuel for the other airlines; and a host of 
other daily needs.
  Most people cannot drive less to get to work, school, or to buy 
groceries, so they are forced to pay whatever the oil companies charge 
for gasoline. In the language of economics, demand for gasoline is 
largely inelastic. Higher prices will not lead to a reduction in 
demand, or an increase in speed of repairs, since pre-Katrina 
production and profits were already at record levels and were more than 
sufficient to provide a major incentive to speed up repairs.
  Moreover, the massive and unjustified gasoline price increases of the 
last week will not bring on more supply--only more profits for oil 
companies, as well as severe hardships for millions of Americans. 
Higher prices will not bring on additional supply, in the short term, 
only more profits for the oil companies and more pain for consumers.
  I do not favor price controls when the market is working properly. In 
a properly functioning market, prices are set by the law of supply and 
demand.
  However, in the current situation, we do not have a properly 
functioning market. Part of the market infrastructure has been 
physically destroyed by Hurricane Katrina. Price cannot play its normal 
role under the laws of supply and demand because increasing prices 
cannot produce either an increase in supply short-term or a significant 
reduction in demand. In a largely inelastic market, like our gasoline 
markets, where people depend upon gasoline for life's necessities, and 
cannot significantly reduce their consumption, increasing prices in the 
aftermath of a disaster serve no function other than to enrich the 
sellers at the expense of the buyers.
  At a time of national crisis and tragedy, it is unseemly for a few to 
gain huge profits at the expense of everyone else. In the wake of the 
hurricane, millions of Americans are opening their hearts and homes to 
aid to the victims of the hurricane. It is unfair for a few to gain 
huge profits while many others are sacrificing.
  A frequent comment in recent discussions about the effectiveness of 
price controls is ``Price controls didn't work in the 1970s.'' However, 
price controls in the 1970s were imposed for long periods of time, 
several years in fact. In the current situation, we are talking about a 
much shorter period of freeze--indeed I am urging a temporary freeze 
until supplies are restored to pre-hurricane levels. Until then, the 
market cannot function properly: supply cannot be increased no matter 
how high the price. Hence, the experience of the 1970s is not relevant 
to the current situation.
  Under the bill I am introducing, once the market is restored to its 
pre-hurricane condition, the authority in this bill to freeze prices 
would expire.
  There is a recent precedent for this action. In 2001, the Federal 
Energy Regulatory Commission imposed price caps on the wholesale price 
of electricity in California and other western markets in times when 
demand outstripped supply. FERC found the market was ``dysfunctional'' 
under these circumstances and price controls were necessary to provide 
``just and reasonable'' rates for consumers.
  President Bush supported FERC's price controls in the California 
electricity market. In so doing, the President referred to FERC's 
action as a ``market-based mitigation plan'' rather than price 
controls. Whatever the name, however, the effect was the same: when 
supply was inadequate to meet demand, the FERC stepped in to cap prices 
to keep rates just and reasonable.
  The legislation I am introducing would provide the President with the 
authority to temporarily freeze the price of gasoline and other refined 
products at or below the levels that prevailed before Hurricane Katrina 
hit the Gulf Coast of the United States. This authority would terminate 
when the President determines that the domestic supply of refined 
petroleum products meets or exceeds the level of domestic supply before 
Hurricane Katrina.
  I ask unanimous consent that the text of this bill be printed in the 
Record. I urge my colleagues to support this legislation.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1629

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled.

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Hurricane Katrina Emergency 
     Temporary Energy Price Freeze Act of 2005.''

     SEC. 2. FINDINGS.

       (a) The Congress hereby finds that--
       (1) Hurricane Katrina has caused extensive damage to 
     petroleum production, refining and transportation facilities, 
     and extensive damage to port facilities and electricity 
     generation facilities, causing additional shutdowns of 
     refineries and loss of transportation capacity for petroleum 
     products;
       (2) the shutdown of refineries and reduction in 
     transportation capacity for petroleum products caused by 
     Hurricane Katrina has led to massive price increases for 
     petroleum products throughout the United States;
       (3) these massive price increases have caused severe 
     hardships for millions of Americans who depend upon 
     affordable and adequate supplies of gasoline and petroleum 
     products for transportation and other daily necessities; and
       (4) these massive price increases threaten the availability 
     and affordability of many products in interstate commerce.
       (b) To address these problems caused by Hurricane Katrina, 
     the President should temporarily freeze the price of gasoline 
     and other petroleum products to reduce the burden on millions 
     of Americans and interstate commerce from rapidly increasing 
     prices of gasoline and other petroleum products.

     SEC. 3. PRESIDENTIAL AUTHORITY TO FREEZE PRICES.

       (a) The President is authorized to issue such orders and 
     regulations to temporarily freeze wholesale and retail prices 
     of gasoline and other petroleum products at or below the 
     levels prevailing on August 27, 2005. Such orders and 
     regulations may provide for the making of such adjustments as 
     may be necessary to prevent any gross inequities.
       (b) The President may delegate the performance of any 
     function under this Act to such officers, departments, and 
     agencies of the United States.

     SEC. 4. ENFORCEMENT.

       (a) Whoever willfully violates any order or regulation 
     under this section shall be fined an amount up to three times 
     the amount of the gain from such violation.
       (b) The President, or any person delegated authority under 
     this Act by the President, shall have authority to seek a 
     temporary or permanent injunction in the proper United States 
     district court to prevent or halt violations of orders or 
     regulations issued under this Act.

     SEC. 5. TERMINATION OF AUTHORITY.

       The authority under this Act shall terminate upon a finding 
     by the President that the

[[Page S9737]]

     domestic supply of petroleum products meets or exceeds the 
     level of domestic supply as of August 27, 2005.
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