Lawmakers in the House have introduced a bill creating a Federal Law against "price gouging" at the pump. According to the article, Rep Bart Stupak (D-MI) says he is concerned gas prices will again reach $3/gallon. This is essentially creates a price-ceiling for the retail gas market. What will happen with this?
Suppose there is some big shock: Iran gets enthralled in War, another bad hurricane in the Gulf Coast, another massive earthquake in Alaska, or whatever. Oil is traded on a global market, and one of these shocks would trigger a fast spike in oil prices. If this spike in prices is large enough, gas would need to be sold above $3/gallon for there to be any profit. Now, U.S. refineries and other U.S. gas retailers would be unwilling to purchase oil from world suppliers because it would be too expensive relative to what they could sell it for. Clearly, the result would be empty gas stations in the U.S.
Additionally, what would happen to the little bit of gas that did make it here? Even if it was sold at a retail price of $3/gallon, the individual who managed to get it would have a big incentive to turn around and sell it "black market" to somebody willing to pay a whole lot more. We'd be left with a gas shortage and paying very high prices for gas on a black market.
Remember, "high" prices does not equal price gouging.
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