As Gas Prices Rise Again, Democrats Blame Big Oil

The bill, which has 100 co-sponsors, would instruct the Federal Trade Commission to define gouging to stop "unconscionably excessive" pricing or instances of "gross disparity" between the prices of crude oil and gasoline. The measure stipulates tough penalties, including fines up to $150 million and up to 10 years in prison for executives found guilty of price-gouging. Stupak has scheduled a hearing for May 27.

Congress asked the FTC to define price gouging last year. The FTC said the term mainly applied to local cases and that those could not last long without competition forcing prices down again.

"It's difficult to understand precisely what price gouging is," said John H. Seesel, the FTC's associate general counsel for energy. "The term is usually defined in terms of other phrases that are equally hard to get a handle on, such as 'unconscionable' or 'excessive.' "

On his way to testify Wednesday before the House Energy and Commerce Committee's subcommittee on oversight and investigations, American Petroleum Institute economist John C. Felmy said the price-gouging legislation was "of grave concern."

"It is so vaguely written in terms of what is price gouging and has such onerous penalties that we are very concerned that it could have unintended consequences," Felmy said. Gasoline suppliers, uncertain about their ability to raise prices, "might just shut down."

For the moment, however, business is too good for that. After years of being a low-margin business with lots of regulatory hassles, oil refining has become lucrative. Eitan Bernstein, oil analyst with the investment bank Friedman, Billings, Ramsey, wrote last month that "refining margins have pushed to new highs" in the first quarter, averaging $15.75 a barrel, about 30 percent more than last year. He increased earnings estimates for U.S. refiners.

Democrats say that a series of oil mergers in recent years gave big companies the market power to drive up those margins.

Oil executives disagree. "I would beg to differ about whether this is a question of industry concentration and instead a factor of supply-and-demand economics," said David Sexton, president of Shell Oil Products.

The other part of the Democrats' strategy involves standing up to Big Auto, not Big Oil. The Senate, with broad Republican support, is poised to mandate a 10-miles-per-gallon increase in fuel efficiency for new vehicles over the next 10 years.

But oil experts say that such measures won't lower gasoline prices. "This is the usual song and dance that politicians feel the need to go through when prices go up," said Severin Borenstein, director of the University of California Energy Institute.

Borenstein said the proposed boost in fuel efficiency standards was "so modest that it sort of makes a joke of any real attempts to deal with either climate change or our growing demand for oil." He said that the increase in mileage standards would not be enough to offset the growth in demand as the economy and population grow.

While the half-dozen Democratic senators stood on Wednesday in front of the Exxon station near the Capitol, Joseph Rohayem, part owner of the station, sat inside behind the cash register.

"It's hard to tell who can control the prices," Rohayem said. "We do our best to stay in business."