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Everyone Hates the Gouger
Once upon a time in the not-too-distant past, there was a coastal town called Portside. A large hurricane was headed for Portside and the mayor ordered a complete evacuation.
There were only two routes out of Portside. Each route had a gas station situated just outside of town. After both gas stations, there wasn’t another one for 100 miles. One gas station was owned by Sammy Sweetpants. The other was owned by Gavin Gouger.
Sammy Sweetpants was a good citizen. He knew his pronouns and always used the right ones for others. He always recycled. He had his pets spayed and neutered. He always obeyed the speed limit and stopped twice at every stop sign. He never smoked, cussed or ate beef. Sammy drove a Prius.
Gavin Gouger was different. He ate huge steaks, owned assault rifles, smoked big smelly cigars and cursed like a sailor. He drove a giant gas-guzzling pickup truck with over-sized tires and the biggest engine available. He didn’t care about pronouns and flew a great big American flag at his gas station.
When the evacuation began, Gavin realized that there would be a large demand for gasoline and that it would be in short supply. Gavin raised his price to $12 per gallon. Some would call it gouging.
Sammy didn’t believe in price gouging and kept his price at $3 per gallon.
During the evacuation, the townspeople used both routes to get out of town.
At Sammy Sweetpants’ station, everyone on the route stopped and filled up because they liked his price. Even if their tank was almost full, they would top it off. Everybody loved Sammy Sweetpants.
At Gavin’s Gouger’s station, it was a different story. People would see the $12 price and, if they had enough gas in the tank, would continue to the next station 100 miles down the road. Those whose tanks were almost empty had to stop at Gavin’s station and pay his exorbitant price. They cursed Gavin Gouger for taking advantage of them. Everybody hated Gavin Gouger.
Because of his low prices, Sammy Sweetpants sold his gasoline at a much faster pace than did Gavin Gouger.
Then, Sammy’s station ran out of gas.
Sammy being out of gas wasn’t a problem for people who had enough gas to drive the additional 100 miles to the next station. But some people needed that gas. The price of it ceased to be an issue. Instead of being stuck paying an exorbitant price, they couldn’t buy gasoline at all. The result was stalled cars on the side of the road. Entire families were stranded on the evacuation route and a hurricane was on the way. Some deaths resulted, but were underreported by the media.
That didn’t happen at Gavin Gouger’s station. Drivers that had enough gas drove past his station when they saw his price. Those who really needed the gasoline stopped and paid the exorbitant price, grumbling the whole time about being “gouged.” Few of them realized that gasoline was available to them solely because of Gavin’s high price and would not have been otherwise.
When the hurricane was over, Sammy Sweetpants was lionized by the press, because he kept his prices low during a crisis. The press ignored the serious problems caused by Sammy’s good intentions.
Gavin Gouger, on the other hand, was vilified by the press, even though there were no stranded families on his route.
Years went by. Hundreds of people attended Sammy Sweetpants’ funeral. Testimonials were given about that day he kept his prices low during the hurricane.
Practically no one attended Gavin Gouger’s funeral, even though he likely saved lives on the day of the hurricane.
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I argued about gas gouging with my son when the NE was having issues with pipelines. He had a long commute to work and as gas dried up at a lot of area gas stations, he insisted that jacking the price should be illegal. If that situation got much worse, he’d appreciate the availability that gouging provides.
I worked in a gas station in the 70s during the oil embargos. You’d be amazed how many people will top off for no good reason and wait in line to it. Needless to say, a gas shortage is going to be the lead story on every news program, front page stories, what people are talking about. That raises awareness and drives people to top off, because there’s less certainty that the gas station will have gas at all in a few days.
And it pushes the top off mode at the worst time. Under normal circumstances, the average car probably has an average of a little more than half a tank. During a shortage, 70% of autos are driving around with almost a full tank on average. That’s a lot of gas that’s just sitting in tanks that otherwise would be available for purchase. That will exacerbate shortages and, in short order, drive up the price anyway.
Their immediate “solution” to that could be “No gas for you!”
Which the station could do anyway, as “we reserve the right to refuse service to anyone.”
It’s a private business, you know. They don’t HAVE TO sell you ANYTHING. At ANY price.
Do they have to bake the cake?
I don’t think so. But various Colorado pols keep at it no matter how many times they get slapped down.
Which is completely different from a police officer, a sworn representative of the state, telling you whether you can or cannot buy gas.
Sammy Sweetpants is suing the bakery.
Well, not so completely. The cop could be seen as just assisting the dealer/seller. Either way you don’t get gas if the dealer doesn’t want to sell it to you. Whether because he looks at your gauge and thinks you don’t need more, or because you refuse to let him look and he tells you to pound sand.
The main difference between the dealer looking and a cop looking is probably that various drivers with short fuses are less likely to threaten a cop over it. But that means the dealer should be packing too, and maybe have someone else behind him who’s also packing.
Cops being used was suggested as an alternative to letting Gavin raise his prices. In short, the government is telling Gavin how to set his prices and enforcing it.
When is @jameslileks, whose family owns a gas station, going to weigh in?
If that’s your issue, maybe you should start with the government-ordered evacuation. Maybe they shouldn’t be allowed to do THAT. Or if they have that power, maybe they should be required to supply fuel to make it possible, and cut both Sweetpants and Gouger out of it entirely.
You can take away the government ordered evacuation, and the story would unfold pretty much the same way.
Except that the people who maybe can’t afford to buy gas, might just stay home rather than be stranded without transportation because of a government mandate. Especially if maybe they can’t afford to buy gas RIGHT THEN from EITHER place. Or just prefer not to spend their money that way. Maybe they get injured or killed, maybe not. Seems to me that most people survive hurricanes etc even if they don’t evacuate.
Even if a lot of people stay home, Sammy Sweetpants will still run out of gas. I know this ‘cuz I got inside information.
The problem with Jerry’s suggestions (#19, 20) is that someone other than the user is deciding each user’s “need.” How much does each family value evacuation versus sheltering in place? Is the enforcer also going to factor in such things as whether the evacuating family could evacuate using one vehicle only versus taking both of the family vehicles? Or whether the family is using the family’s most fuel-efficient vehicle?
Yes, the story is a simplistic scenario to illustrate a point.
Suppose instead of a complete evacuation in the face of a large hurricane (or fire or other moving potential disaster), it was a lesser disaster that people in some parts of town, or who had access to certain types of buildings or shelters could ride out in relative safety. Those in other parts of town or in less secure buildings, or who had health problems who could not survive days or weeks without electrical life-preserving equipment would place a higher value on evacuation than would those in secure parts of town and buildings. Price gouging on gasoline ensures those who should not evacuate do not take from those who place a higher value on evacuation.
The example I keep thinking of is gasoline powered electrical generators. Price gouging by the hardware store after a disaster makes it more likely that the family that seeks a generator to keep grandma’s oxygen machine going gets one rather than the family who seeks a generator for some frivolous want. Price gouging by the local hardware store also encourages others to bring to town truckloads of generators from elsewhere so more people can acquire generators.
At least it’s all voluntary at that point. And with fewer people on the road, and no government roadblocks, maybe the people who can’t get anything because Sammy runs out, can go the other direction.
If they BOTH run out, that’s a separate problem.
True, but, it seems likely that the people who seek a generator for some frivolous want can probably afford to pay more than the people with a grandmother on an oxygen machine.
But Gavin will have made enough money to buy the replacement fuel, which will be expensive because of the hurricane.
Definite possibility.
True, but nowhere near $12/gallon.
You’ve never bought gasoline at that price?
Neither have I, but not so far from that price. In Ireland, when it was more expensive than now.
I meant nowhere near $12/gallon to resupply from the distributor. Not if the “regular” price at the pump was supposed to be anywhere near current prices, before getting jacked up to $12/gallon.
I was in attendance at a Friday afternoon seminar in a graduate school of business. The presenter had a clever algorithm for allocating time on a mainframe server to users who in aggregate had more demand for CPU time than was available.
His algorithm started with each user inputting (quantitatively) how much they needed the server time.
Everybody in the room pounced on this and he had no sensible response. When I left the seminar an hour into it, he was still on his second presentation slide.
That is a PERFECT example. Charge each user $x per hour of server time. Keep increasing X until the demand for server time falls to the amount of server time that is available.
Illinois now has the second highest gasoline taxes in the country. Governor Jelly Belly is responsible for raising it every year…except when he ran for re-election. He mandated that every gas pump in the state bear a sticker to inform customers that the gas tax increase was postponed for a few months.
People forget that a large part of what they pay for fuel is a government mandated contribution to the general fund.
Rationing on a temporary basis during a crisis is quite logical and reasonable. We are not talking ongoing price controls. Indeed, you might even pay the person with tax dollars to cover their costs plus a profit and then give gas away based on need during the crisis.
This works in the short term, with specific factors.
Never let a crisis go to waste, they say.
Hindsight is 20/20. Using the perfect vision of hindsight, both stations could have sold their gas for $7 per gallon and restricted purchases to $70 or 10 gallons. This would have accomplished four things: 1) people could purchase enough gas to guarantee their arrival at the next station 100 miles down the road, while 2) preserving the limited supply enough to allow nearly all the people the opportunity to get out of town and, 3) remunerating the station owners properly for their extra diligence in managing the distribution so as to be able to service everyone which, 4) would include the benefit of keeping the government out of the way.
As I said, however, hindsight is 20/20. Reality is always less than perfect and supply and demand are always better than bureaucratic price controls.
That is a perversion of what I just said. I was not calling for anything long term.
You call for short-term response to the crisis.
The feds will respond to your request and stay for the long-term.
That’s what happened during the Great depression. FDR had a lot of support for his short-term responses. But then Republicans grew alarmed when they saw that the feds had come to stay. They are with us to this day. The president of the Michigan Farm Bureau explained that in a draft of his autobiography, a part that didn’t make its way into the version that was published by the university with which he was associated (and which has a building named after him).
That’s why the left says, “never let a crisis go to waste.”
I was making a real point about rationing being something that works in this hypothetical situation. Apparently, you feel the need to add a whole bunch of stuff. Apparently, short term food rationing, once put in place during a siege has never in the history of the world be undone. Heck. FDR imposed meat rationing is still with us till this day. How wrong I was.
I find you to be one of the most tedious people at RIcochet.