Close X Cookies are necessary for the proper functioning of By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
Gold & Silver Prices in

In Praise of Price Gouging

IMG Auteur
Published : November 13th, 2012
518 words - Reading time : 1 - 2 minutes
( 14 votes, 4.4/5 )
Print article
  Article Comments Comment this article Rating All Articles  
Our Newsletter...





As the northeastern United States continues to recover from Hurricane Sandy, we hear the usual outcry against individuals and companies who dare to charge market prices for goods such as gasoline. The normal market response of rising prices in the wake of a natural disaster and resulting supply disruptions is redefined as “price gouging.” The government claims that price gouging is the charging of ruinous or exploitative prices for goods in short supply in the wake of a disaster and is a heinous crime But does this reflect economic reality, or merely political posturing to capitalize on raw emotions?

In the wake of Hurricane Sandy, the supply of gasoline was greatly disrupted. Many gas stations were unable to pump gas due to a lack of electricity, thus greatly reducing the supply. At the same time demand for gasoline spiked due to the widespread use of generators. Because gas stations were forbidden from raising their prices to meet the increased demand, miles-long lines developed and stations were forced to start limiting the amount of gasoline that individuals could purchase. New Jersey gas stations began to look like Soviet grocery stores.

Had gas stations been allowed to raise their prices to reflect the increased demand for gasoline, only those most in need of gasoline would have purchased gas, while everyone would have economized on their existing supply. But because prices remained lower than they should have been, no one sought to conserve gas. Low prices signaled that gas was in abundant supply, while reality was exactly the opposite, and only those fortunate enough to be at the front of gas lines were able to purchase gas before it sold out. Not surprisingly, a thriving black market developed, with gas offered for up to $20 per gallon.

With price controls in effect, supply shortages were exacerbated. If prices had been allowed to increase to market levels, the profit opportunity would have brought in new supplies from outside the region. As supplies increased, prices gradually would have decreased as supply and demand returned to equilibrium. But with price controls in effect, what company would want to deal with the hassle of shipping gas to a disaster-stricken area with downed power lines and flooded highways when the same profit could be made elsewhere? So instead of gas shipments flooding into the disaster zones, what little gas supply is left is rapidly sold and consumed.

Governments fail to understand that prices are not just random numbers. Prices perform an important role in providing information, coordinating supply and demand, and enabling economic calculation. When government interferes with the price mechanism, economic calamity ensues. Price controls on gasoline led to the infamous gas lines of the 1970s, yet politicians today repeat those same failed mistakes. Instituting price caps at a below-market price will always lead to shortages. No act of any legislature can reverse the laws of supply and demand.

History shows us that the quickest path to economic recovery is to abolish all price controls. If governments really want to aid recovery, they would abolish their “price-gouging” legislation and allow the free market to function.



Data and Statistics for these countries : Jersey | All
Gold and Silver Prices for these countries : Jersey | All
<< Previous article
Rate : Average note :4.4 (14 votes)
>> Next article
Congressman Ron Paul of Texas enjoys a national reputation as the premier advocate for liberty in politics today. Dr. Paul is the leading spokesman in Washington for limited constitutional government, low taxes, free markets, and a return to sound monetary policies based on commodity-backed currency. He is known among both his colleagues in Congress and his constituents for his consistent voting record in the House of Representatives: Dr. Paul never votes for legislation unless the proposed measure is expressly authorized by the Constitution. In the words of former Treasury Secretary William Simon, Dr. Paul is the "one exception to the Gang of 535" on Capitol Hill.
WebsiteMake a donation
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Trump’s Best Debate Performance ...
23 Octkevthorne-1
A vote for that woman is a vote for WWIII. Mr Trump is a builder, not a warmonger - do you want a future on earth for you and yours - or Armageddo...
Silver Bull Market in Force
22 OctS W.
Interesting tech analysis here. Good stuff as I have never looked at 'full bars' closing above or below a 20 bar MA. Only ever the close p...
The Fascist Threat
22 Octsam_site
Your idea that extreme right and left fascism meet is brought out in the Spanish Civil War. The globalists created right wing fascism in Germ...
Trump’s Best Debate Performance ...
21 OctThe Recusant-1
Yes, this WAS his best debate performance! But for all the reasons you mentioned, he failed to deliver. And that's why he will be defeated next mon...
Trump VS. Clinton-Who’s “Better”...
21 OctDoom1
Uh...I'm not sure I understand the conclusion here.
Trump’s Best Debate Performance ...
20 OctS W.0
I have only watched the 3rd debate. I am not American. Clinton is a far more polished debater and was far better prepared than Trump. I agr...
Fifteen Years Into the Afghan Wa...
19 Octsam_site
Follow the money folks. Heroin production jumped 13X when the CIA globalists took over Afghan production. You'll never get the sheeple to see the...
My Most Passionate Warning Yet
17 Octstackerguy551
Thank you Mr. Hoffman. I am concerned by the tone of your article, it is pretty scary to say WWIII is probable, and, so it may be, considering some...
Most commented articlesFavoritesMore...
World PM Newsflow