The Consequences of Price Gouging Laws

The southeast US is being hit twice with fuel disruptions.

The first event was by a pipeline leak of the Colonial Pipeline in Alabama (here). People panicked as a result of hyped-up media coverage. People filled up as a way to hoard gasoline in their vehicles and hopefully have enough until supplies returned. Luckily, there were no price gouging laws because that would have discouraged suppliers from coming in from unconventional sources to provide more fuel. Slowly, supply is returning.

However, the end is in sight. Woodring said gas is already coming in and the shortage will end soon.

“We got it this morning, but only half a tank. We usually get 7,000 to 10,000 gallons when we’re out and we got 3,000. So that’s what happens,” Woodring said. “It is pumping in right now, but it still has to fill up.”


The second event is Hurricane Matthew. It is about to hit the state of Florida and travel up the coast. Any existing price gouging laws will limit supply.

These laws are intended to protect sellers from taking advantage of consumers. But more often they exacerbate shortages by forcing sellers to sell gasoline at prices that are below what it would actually cost to obtain additional supplies.

Although many of these laws allow prices to increase to reflect higher costs, stations and fuel suppliers are often unsure of how their relevant costs might be interpreted by enforcement agencies.

As a result, they frequently choose to keep selling until supplies run out rather than increasing their price.

So how would things be better if gasoline prices had risen to, say, $3.50 a gallon last month? First, many of you would have bought a little less gasoline and drove a little less by combining trips, postponing unnecessary driving, or sharing rides. The higher the price, the more you save by using less. This would ensure gasoline is still available at the station for those who really need it.

Second, higher prices in areas impacted by the supply disruption would encourage even greater efforts by suppliers to bring in additional supplies from surrounding areas. Relocating fuel from other regions can be quite costly, and less fuel will flow in if this additional cost cannot be recouped when the gas is sold.

Third, if prices were high enough to significantly reduce usage and increase supply imports, stations would be much less likely to actually run out of gas. “Panic buying” and consumer stockpiling can occur if consumers believe they may not be able to purchase when they need to.

In the supply/demand calculus, price gouging laws limit supply and increase demand.


Wells Fargo CEO John Stumpf Facing Congress

The hypocrisy is so rich. “Elected officials” grilling Wells Fargo CEO John Stumpf.

These are the same people who created the country’s $20 trillion debt, cannot get an honest accounting of the department’s finances, have 70% of the budget on automatic pilot because of entitlement programs, say the military is financially depleted yet the Us spends as much as the next nine countries combined on military spending, implemented Obamacare which made health insurance and medical service levels worse then they already were.

The Wells Fargo issue is a case of fraud. Laws and procedures are already on the books to deal with it.

Hey you gutless wonders in Washington, learn to manage your own affairs. Get your own house in order and stop trying to run the lives and businesses of the people.


Collaborating to Reform Government

The days of partisan bashing are sounding so obsolete these days. For instance, Democrats and their allies love to demonize the “Koch Brothers”. Que scary music.

In reality, political organizations are working with whomever they share a common interest with regardless of where they fall on the equally obsolete political left and political right.

Looks whose working on criminal justice reform:

Trump has used a recent spike in violent crime in several major U.S. cities to bash the criminal justice reform efforts being pushed by a fragile bipartisan alliance of groups like Koch Industries, the liberal Center for American Progress, the Obama administration, and FreedomWorks, a libertarian-leaning advocacy groups that works with members of Congress on the issue.

Something to think about.

Stupid Laws Web Sites

Here’s a couple, here and here, plus some laws in New York to whet your appetite:

Citizens may not greet each other by “putting one’s thumb to the nose and wiggling the fingers”.
. . .
It is against the law to throw a ball at someone’s head for fun.
. . .
The penalty for jumping off a building is death.
. . .
A person may not walk around on Sundays with an ice cream cone in his/her pocket.
. . .
While riding in an elevator, one must talk to no one, and fold his hands while looking toward the door.
. . .
Slippers are not to be worn after 10:00 PM.

Patriot Act clears House, Senate, to be Signed by President Machine

That machine symbolizes the auto-pilot governments at the federal, state, and local levels operate under. No constitutional limits, no spending limits, no taxing limits, no concern for personal liberty, just churn out law after law, rule after rule, ban after ban.

No, no, no. Government, politicians, and bureaucrats do not solve problems. They create and subsidize them then they blame others when their schemes make matters worse.  They, in effect, perpetuate their own existence by planting the seeds that later grow into trees of problems. Here.