I just laughed earlier today when I saw people RUSHING and lining up to by $3.22 regular gas this afternoon in DC.
Seriously... people that usually only get 10 or 15 dollars worth were waiting in line to 'fill up' at the higher prices.
I laughed, and joked with a friend of mine at the ninnies that get suckerd into actually going out of their way to pay more for something they don't really need.
I put $10 in (which was like 3.2gal) and told the cashier I'd be back in a week or so when they hysteria had faded.
There is no such thing as price gouging.
It is an invented term by those who think they can alter reality with wishful thinking.
Price caps mean people will hoard goods.
There will be less incentive for rich and middle class people to cut back on their purchases, and there will be less goods left for the poor.
Consider this: is a person more likely to fill up their boat or motorcycle to go out for a ride if gas is 2.50 a gallon or 4 bucks?
More likely to go on vacation if hotel rooms are $100 a night or $250?
bump
bttt
ping
If the supply goes down, the price will go up.
That's all well and good.
But if Marathon Oil's supply goes down and their price goes up, there is someone in some office looking at available data making a decision what the price should go up to.
There is no auction at the corner gas station with an auctioneer saying "2.50, 2.50, 2.50....2.65...265...3.00, 3.00, 3.00....sold to the gentleman in the strawhat & coveralls for $3. a gallon."
Someone sets the price using some formal or informal standard or formula to do so. Let's not pretend otherwise.
bookmark
Gouging is impossible in a free market. Gouging is simply a term for charging what the market will bear, which the single most important element in getting goods and services to the point where they will do the most good. After Hurricane Andrew the MSM and a lot of really dumb politicians were wringing their hands because the price of roofing materials had gone up 5 to 10 fold. This so called price gouging laste only a few days as these apparent bonanze got roofers and lumber streaming to Florida to take advantage of this gold mine. WIthin a few days there were so many roofers and so much lumber available the price when back to normal. Had prices been controlled there would have been no incentive for roofers to head down to Florida to make extram money.
Another of our genius relatives heard from :-).
(Dr. Sowell must have been very energetic in his youth. Okay, that was tacky ...)
The logic error in this article is simple: The demand has not yet overcome the supply. It may well do so, but these sudden price increases are being made IN ANTICIPATION of decreased supply. Therefore, at the present time, the gasoline suppiers at some level of distribution are gouging.
If they waited until next week, or the week after, they might be justified, but not this week.
The other important factor in price increases/decreases is the money supply in a given area. As the money supply increases, that can cause inflation all by itself, regardless of supply issues. In fact, an increase of the money supply can be a definition of inflation. (Some say it is THE definition, which is true historically, but most people think price increases are inflation, when actually prices increases are the RESULT of inflation.)
But these are issues that are not generally taught in Econ 101, so it's understandable that people don't understand them. Supply and demand is taught, so people parrot that phrase without knowing the other factors.
My boss just changed my work schedule to 4 - 10 hour days instead of 5 - 8 hour days after seeing the prices! *Snicker*
I love it!
It amuses me to watch people panic over gas prices.
"Some analysts warn move may spur supply problems."
Read: analysts with whom we strongly disagree and would throw into dungeons to silence them
Libertarian ping.To be added or removed from my ping list freepmail me or post a message hereThe good Dr. On Florida Price 'gouging', by a 'Republican' (Jeb):
http://www.townhall.com/columnists/thomassowell/ts20040914.shtml
Price gougers my butt, and it isn't even about profits.
These gasstations have bills to pay every week with or without gasoline to sell. If they run out of gas as most expected than they still need to pay the bills, so good planning requires them to guesss how long they would be without gas and to adjust prices accordingly.
This allows them to stay in bussiness when they have no gas to sell.