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Lawmakers expand power to punish price gouging

Disasters outside state could prompt price protections

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South Carolinians clearly felt economic pain after Hurricane Katrina devastated three Gulf Coast states, shutting down eight oil refineries and dozens of rigs last August.

Palmetto State gas prices topped the $3 per gallon mark for the first time in September, but in some places the price skyrocketed by more than 80 cents a gallon to $3.22. And in at least one instance, it soared higher, hitting $5 a gallon.

The bill, which cleared the House and was sent to the Senate Thursday, would make it easier for the state to prosecute those who participate in price gouging during an emergency.

The change would criminalize price gouging when a state of emergency outside the state affects prices in South Carolina. Under current law, officials can't investigate such claims as a criminal matter unless the governor has declared South Carolina in a state of emergency. Price gouging is defined as charging an "unconscionable price" for goods, services or lodging -- a price grossly higher than the average during the 30 days before the emergency.

South Carolinians must be careful, though, that overzealous public officials don't make bad decisions. As The Chicago Tribune noted last fall, the line between fair pricing and exploitation -- at least in the case of gasoline -- is a mirage. "There is no economics textbook that will tell government officials the right margin for retailers to get on their sales. Fortunately, the market itself serves as a vigilant check on greed."

"When nature interrupts supplies, though, consumers can hardly expect prices to be unaffected. Higher prices are the market's way to promote conservation -- encouraging motorists to park the car, take the bus or at least avoid nonessential driving."

An opinion poll released in September by 40mpg.org found that nine of 10 Americans believed that oil companies were gouging consumers. While some clamor for anti-gouging legislation from state lawmakers, financial writers at Fortune magazine and other publications say that the price of gasoline is a complex issue that goes beyond profits at the corner convenience store.