Skip to comments.Miles-Long Gasoline Lines In New Jersey Show The Case For "Price Gouging"
Posted on 11/02/2012 3:02:31 PM PDT by grundle
Look at these photos of miles-long lines for gasoline in New Jersey and you'll see that there's a real issue here. The Christie administration fined a gas station for breaking price gouging rules back in September, and issued a press release before Sandy hit noting that case and explicitly warning retailers not to respond to the hurricane by raising prices. The failure to allow prices to adjust doesn't magically eliminate the supply side problems, it just means that the gasoline is misollacated and lots of people need to waste time in line. You can also see that the combination of shortage and underpricing seems to be leading people to overconsume when they do get to the front of the line.
Last but by no means least, the lack of price gouging is harming things on the supply side. If it were possible to earn windfall profits by transporting gasoline into the affected areas, then human ingenuity would be finding ways to do it. But if you restrict retailers to earning merely ordinary profits, then people won't take extraordinary measure to increase supply. Worse than that, gas stations are probably making unusually small profits right now since gas stations don't normally make much money selling gas. Since it's a competitive market for an undifferentiated product, you get razor-thin margins on fuel and try to use it as a lever to get people in the door to buy snacks and sodas. A gasoline supply crisis just brings out lots of people who genuinely only want gasoline.
(Excerpt) Read more at slate.com ...
Where is obama?
They have been warned.
Where is obama?
wHERE WERE THE FEMA TRAILERS?
wHY WAS NOT THERE GASOLINE TRUCKS WAITING TO BE BROUGHT IN?\\\Hey the left asked these questions, so why not ask their questions in this storm.
i wonder why peopel can’t go outside the area for gas? even 50miles away if need be. that’s only a couple of gallons of gas, and you can jump on the turnpike and go to another area...
The Kinks - A Gallon of Gas
Wealth is a necessary but not sufficient condition for the successful achievement of happiness. The production of wealth depends on a proper modern division of labor society. A proper division of labor depends on the institutions of capitalism. One of the institutions of capitalism is the free market price system. The division of labor depends on the existence of a price system for its successful functioning and, indeed, for its very existence.
In a free society with a free market price system, it is normal and natural for prices to rise when supply of a good is decreased and for prices to fall when supply of a good is increased. It is also normal and natural for prices to rise when demand for a good is increased and for prices to fall when demand is decreased.
The principle is the price of goods and services in limited supply in a free market always tends to be set high enough to level down the quantity of the good or service demanded - that is, the quantity of it that buyers are seeking to buy to equality with the limited supply of it that exists.
The concept of price gouging and price controls to prevent price gouging is an assault on freedom, the free market, the price system, and the division of labor, the production of wealth, and the overall happiness of the community in the long run. The use of force to apply price controls is an assault on the natural rights of individuals including freedom and property.
Yes. And why can’t enterprising folks from 100 miles away drive over with pre-filled gas cans or something?
As expected, the comments after the column do not disappoint. Profit = gouging.
The laws of supply and demand work, and prices must be allowed to move accordingly.
Because the government took away the profit motive. Why do all that work to make only a couple dollars?
My thoughts exactly!
“Gouging” isn’t the answer, but allowing reasonable market based increases is.
Walter Williams makes this point so clearly that even liberals could understand if they would take their fingers out of their ears and stop saying, “I can’t hear you! Blah blah blah!”
No, it shows the case for:
more US oil production
the Keystone pipeline
an end to the “boutique” blends
an end to the ethanol mandate
an end to union thuggery preventing infrastructure repair.
When I saw a shot of such a gas line on TV, I wondered how many of those in line would be turned away once the station’s tanks were empty. Surely, the stations will run out at some point.
And, I think, there will be some seriously ticked off people then.
Price gouging is the lowest form of capitalism. Taking advantage of victims is immoral.
The author believes wasting time is bad, while wasting money is just fine. Did it occur to him that time is free, while gasoline is not?
For the rich man, time is most precious, while money has less value, but for the poor man, time is cheap & money is hard to come by. So, gouging favors the rich at the expense of the poor. This is acceptable in normal times, but unacceptable in times of crisis.
Actually, the lines perform the same function as pricing, only based on need rather than wealth. Those that desperately need gasoline, for whatever reason, are willing to sit in line, while those not so in need do without.
Which is more important: A bank executive getting to work in Manhattan or a man getting gas for the generator that powers his wife’s oxygen machine? Who would be willing to wait in line longer? Who needs the fuel more?
BTW, its been 4 days now without power, so those people running gasoline generators are getting low on fuel. They will be out looking for more fuel now, making a bad situation much worse. Last hurricane, I drove 55 miles, one way, to get 40 gal. of gas for my generator.
Why can’t they go out of the area for gas??? Oh, they are, they are. There are gas lines in the Poconos in PA. No shortages yet.
Has New Jersey suspended the ban on an individual motorist pumping their own gasoline or are they still requiring the gas station attendant do the pumping?
Does anyone know the current situation?
When the price of a scarce commodity is allowed to rise to an appropriate level, the scarcity of that commodity eases as suppliers rush to to find ways to fill the demand.
So if your goal is to institute some concept of fairness, price controls are the way to go. Of course they will also increase the length and depth of the scarcity.
If, however, your goal is to eliminate the scarcity, then allowing "gouging" is the way to go.
So you can feel righteous amidst scarcity, or you can allow human ingenuity to solve the problem.
Take your pick:
Thomas Sowell discusses how to efficiently handle commodity shortages in times of crisis, specifically dealing with "gouging":
Simple economics has nothing to do with a gas station owner gouging customers, nor will it do anything to improve the flow of fuel to hard hit areas. Fuel suppliers are moving fuel to the area as best they can regardless of price.
The shortages of gas are a result of power outages closing many stations, & transportation problems getting the fuel to blocked/flooded areas. The high demand for gas is a result of commuters w/o mass transportation forced to drive to work, storm victims searching for supplies, & generator use.
Gouging is greed by the station owner, it rarely involves distributors, & will not increase supply one bit.
Having said that, I do not fault gas station owners for raising prices slightly, say 25 cents/gal., to cover extraordinary costs of keeping the station open, such as generators to run the pumps & extra security. That, to me, is not gouging.
If only the moronic RATvoters would start whacking out about government greed at every level, and the outrageous price gouging by thieving universities and "professors".
Well then I guess Thomas Sowell and Walter Williams have a lot to learn from you about economics.