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Press Release
Jun 08, 2006 - 03:30 AM

Consumer Group Applauds Atty. Gen.'s Broader Gouging Law, Urges Swift Approval in Legislature

Santa Monica, CA -- Legislation proposed by California Atty. Gen. Bill Lockyer and Assembly Speaker Fabian Nunez would modernize and broaden state gouging laws to apply during "abnormal market disruptions" like those that produced $3.39 per gallon gasoline last month. The legislation would also bring oil refiners and other makers and suppliers of consumer products under the law, instead of focusing only on retailers. The new law would aid consumers because it could be applied to gasoline price spikes, said the Foundation for Taxpayer and Consumer Rights.

"This closes a loophole in the state's gouging law that giant oil companies have waltzed through en masse during the last few months," said Jamie Court, president of FTCR. "Consumers have been ripped off by price spikes completely out of proportion to the increased costs of refiners' raw materials, including crude oil."

Read FTCR studies on gasoline pricing here and here.

The measure would also allow the state to extend application of the law for up to 120 days after a federal or statewide declaration of emergency. But the chief improvement, said FTCR, is addition of "abnormal market disruptions," meaning a price spike of 10% or more attributed to unusual market conditions rather than natural or manmade emergencies could be examined for evidence of gouging.

The law would have been even better if it did not require the governor to first declare a market disruption, said FTCR. "As proposed, it forces the governor, a politician, to make the call on a violation of law more effectively left to the attorney general and his prosecutors," said Court, "Oil companies have given Gov. Schwarzenegger and his committees $2.3 million, and obviously expect something in return."

Despite that flaw, the law is a strong step for consumers. "The fact that Assembly Speaker Nunez and Atty. Gen. Lockyer announced this measure together should mean a speedy passage through the Legislature, even though the oil companies will apply a lot of money and muscle to sway lawmakers' votes," added Court.

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