House fails to pass gasoline price gouging bill

WASHINGTON (Reuters) - Following a White House veto threat, the House of Representatives on Tuesday failed to passed legislation giving the Federal Trade Commission the authority to punish oil companies that charged excessive prices for gasoline during supply emergencies.

The vote was 276-to-146 in favor of the bill, falling short of winning the two-thirds "yes" votes necessary to clear the chamber.

Under the legislation, companies could have been fined up to $150 million for gouging consumers at the pump and individuals faced a fine of up to $2 million and a 10-year prison term.

The White House had threatened to veto the bill, saying the legislation could result in price controls and may bring back long lines at the gasoline pump last seen in the 1970s.

"By controlling prices, (the bill) would interfere with market mechanisms and distort price signals that encourage suppliers to provide more gasoline," the White House said.

Instead, the administration said Congress should pass legislation to increase domestic oil production and encourage refineries to expand.

The National Petrochemical and Refiners Association also opposed the legislation, saying it could threaten the ability of U.S. refiners to provide gasoline, diesel and jet fuel at prices necessary to maintain adequate supplies during emergencies.

This was one of several energy bills that lawmakers planned to act on this week before they leave for their July 4th holiday recess.

The House is also expected to take up legislation that would require oil and gas companies that have held drilling rights on federal leases for years to explore for supplies on those acres or lose the right to obtain new leases.

Oil and gas companies, with the support of the Bush administration and Republican presidential candidate John McCain, want Congress to allow offshore drilling in those areas where energy exploration is now banned.

Democrats say companies already hold millions of undrilled acres in federal offshore leases and the pending House legislation would push them to develop those potential energy supplies.

(Editing by Christian Wiessner)