19 thoughts on ““Price Gouging””

  1. The news is everywhere that nationwide we should expect gas prices to rise because of the storm’s impact on oil refineries. Oil companies taking advantage of consumers because of the storm, that’s price gouging! I’m going to call my congressman and demand that he pass a law forbidding this practice. They should just continuing selling the gas at the same price they have been or better yet we should set up a commission that conducts research and sets a fair price for gas.

    1. And then when we run into severe shortages, a commission to research that an propose more government action to remedy that problem … Until it all collapses.

  2. The reason there are price gouging laws is it’s an emotional issue, compounded by the fact it occurs so often in conjunction with disasters.

    What it (like so many emotional issues) ignores is reality. This is easily illustrated by a gas crisis a few years ago in Arizona, caused by a pipeline break. Arizona doesn’t have anti-price-gouging laws, so gas prices skyrocketed, doubling within days. The result of this is it made it very profitable to truck in gas from other areas, thus increasing supply.

    On the other hand, if Arizona had anti-price-gouging laws, prices would have remained as there were – and stations would have simply run out of gas to sell. So, you’d have lower prices and no gouging, but no gas available to actually buy.

    The counter argument is that poor people could not afford to pay double or more per gallon. (this argument is usually used by the same folks who want to jack up the price of gas via taxes). It’s true, but what’s the difference to them between being unable to afford the high price vs. having no gas available?

    Basically, anti-price-gouging laws are economic ignorance in action.

    1. “what’s the difference to them between being unable to afford the high price vs. having no gas available?”

      The difference, according to Rand, is that having gas at a higher price makes it possible for even the poor to get gas. See his article “three cheers for price gouging”: A better solution for this is not to subsidize prices, which misallocate the resources due to the false market signals, but to subsidize the individuals who need help, by giving them cash or vouchers (somewhat akin to the food stamp program).

      I think this idea is really interesting, and worthy of coverage in the news.

      My twin concerns: how do we find the people who need vouchers in time for them to use them, and how do we determine whether they qualify for vouchers?

      Say a person needs gas to escape an impending hurricane. They are already on the road, having left in a hurry. They don’t have any financial paperwork with them. They can easily find a gas station, but how do they obtain a voucher to use at the gas station?

      1. I guess one solution would be to distribute emergency vouchers in advance, maybe only people who can show they need it, or maybe just keep it simple and give vouchers to everyone. And maybe the vouchers could only be used when a state of emergency is declared, or maybe the vouchers could be used anytime, forcing the recipients to use them responsibly.

        These vouchers (or cash) is starting to look to me like the beginnings of a guaranteed minimum income.

        1. Wait, won’t the price just go up even higher, to take the vouchers into account? If someone wants to explain how the vouchers are supposed to work, I’d appreciate it.

      2. This isn’t a perfect solution because many people avoid the toxicity of social media, but use social media. Alternatively, you can use hot lines.

        Have you noticed how people on Twitter have been coordinating boat rescues? But often, this is just another way to get in touch with traditional responders like charities and gov agencies not just the militia navy.

        Funding could also come from crowd sourced donations.

        Gov is nice but its best when it enables the populace to flourish on its own. Gov gets all of its resources from the public and the public has more money and manpower than the government. The challenge is in facilitating people to act on their desire to help.

  3. There’s always a question in these kinds of events, if you are better off allowing the prices to rise, or to impose some sort of rationing. It’s like that joke of what’s the market price for the single parachute in a falling plane.

      1. But I think your basic argument still holds: if someone on the falling plane offers sufficient reward, a rocket powered drone or a carefully aimed ballistic system or some sort of high performance aircraft will rendezvous with the falling plane and either deliver parachutes or offer alternative means of rescue. If people don’t bother to do that kind of rendezvous now, it is because the reward isn’t typically high enough.

        Or if we replace the parachute analogy with real life aviation: if there is sufficient reward, the airplane won’t suffer a failure because enough will have been done beforehand to prevent a mishap — we don’t expect Air Force One to ever crash because money isn’t scarce when it comes to Air Force One.

        So, you converted me to your way of thinking!

        Still unclear on the role of vouchers though.

    1. are better off allowing the prices to rise, or to impose some sort of [alternate] rationing.

      Rising prices is a form of rationing in which those that self determine a greater need get that need filled. Poverty is a complete red herring.

      The poor always have less which is supposed to guide their decision in directions that are not theft. Price gouging laws are theft, pure and simple.

      I’m poor. Should I bitch about how unfair this is, join with other poor and steal from the rich? Robin hood was the bad guy.

      The fact that this argument even exists demonstrates a fundamental flaw in society. This is not a debatable argument.

      1. Rising prices is a form of rationing in which those that self determine a greater need get that need filled.

        Sort of. It isn’t like people with the extra money to spend have a greater need, they just have the means to purchase that need at a higher price.

        As noted above, a rationing scheme wont help the gas station buy more gas. They might not make enough money to refill the tanks. But then we can just put price controls on the refineries!

        1. It’s basically used to prevent arbitrage in prices. Arbitrage is quite often considered a predation on the market, where people provide no useful service, and only skim off price differentials. A lot of left-winged people consider this an example of market failure or at least a sign of inefficiency.
          I have typically considered that it’s just another way to cover the cost of transportation, distribution, or whatever, and that the tendency on the long run on an open market is these costs to collapse to near zero. But sometimes because of collusion or whatever this does not happen.

          But yes I do think in some cases the market be damned. Like in the case of the parachutes I mentioned before, or a sinking ships, is it women and children first, or those with the fattest wallets first?

          1. But sometimes because of collusion or whatever this does not happen.

            This is usually the end state of lefty economics.

        2. All resources are limited (a basic economic truth.) Rationing is usually arbitrary controlled as Rand described but doesn’t have to be. For example, coupons could be used for rationing where a black market for coupons also exists. In effect, price still dominates.

  4. It may seem cruel but the law of supply and demand is a bitch that gets it’s due. You raise prices as demand increases I know this seems to defy logic for some .. but there it is.

    How many of those people in Houston, KNEW it was coming but decided NOT to run a few hundred miles away and buy a pickup load of supplies to “market”? There would be no price gouging if people would have remembered their roots and acted like a “yankee peddlar” and bought into the storm.

    1. I don’t know about buying goods to market but I often wonder why people aren’t better prepared when they have forewarning.

      Buying supplies is one thing but if you know its going to flood, get all your precious items off the ground.

      A lot of the hardships in these situations are easy to deal with in the short term and everyone should know the idiosyncratic challenges of their local environment.

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