Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
From the Government, and Here to Help
Secretary of Energy Prevention, Jennifer Granholm has, predictably, come out squarely against a free market in energy. “We expect that [gasoline] station owners are and should act responsibly. We will have no tolerance for price-gouging. Federal and state officials will be investigating those actions if we see price-gouging.”
Secretary Granholm has made it clear that the Biden administration enthusiastically endorses shortages, rather than free-market adjustments, which result in scarcer goods being rationed by higher prices. After all, gas station owners, who usually make between 1 and 3 cents per gallon on the gasoline that serves as an advertisement for Kool Filter Kings and Slim Jims, number among the millionaires and billionaires decried by the Democratic party’s most influential members.
With any luck, shortages can be extended through the summer!
Published in Economics
In the meantime, what I have not heard is any statement from the administration to the effect that cyber-attacks on infrastructure will be treated much like terrorist attacks, and that the U.S. government will pursue the aggressors with the goal of… discouraging… future aggression.
Were a different administration in power, I would hold out hopes that something secret and lethal might occur, the details of which would be whispered for years among another generation of would-be cyber-villains as they dutifully crossed off U.S. targets from their lists of potential victims — the kind of thing that, a couple of decades ago, might have been made into a movie starring Harrison Ford.
But it’s 2021, and I’ll be delighted if this administration doesn’t simply make the situation worse.
Well, yes. They’re part of the Petroleum-Industrial complex, and hence are not only rolling in sin money, but complicit in planetary destruction.
Don’t worry: if prices spike too high, the state will declare a temporary moratorium on gas taxes, to ease the pain for the consumer.
“Jolly joker!” – Sgt Schultz.
The myth of “price gouging” is discussed at length in one of my all-time favorite episodes of Eco talk:
https://www.econtalk.org/munger-on-john-locke-prices-and-hurricane-sandy/
Welcome!
In SC, the gas tax is 24 cents per gallon.
But gas station owners are greedy. Right.
36 cents per gallon here in North Cakalacky. I live close to the state line with SC, so I frequently buy gas there.
There’s no such thing as “price gouging,” there are only market clearing prices.
I just read about a station in Mocksville, NC that turned off the pumps yesterday because people were bringing in truck bed loads of gas cans. She said they would not turn the pumps on until this morning and would not allow anything but vehicles to be filled. Of course, the state AG has stated the price gouging laws are in effect thereby assuring we will not have gas because the news has whipped everybody up into a frenzy. This same station owner said the pipeline thing was going one for almost a week and it wasn’t until the “news” got ahold of the story that they started with the problems. The company had already made plans and were shipping gas from other places. I swear, if we could shut the “news” down for 2 weeks, things would be much better.
Why is supply and demand such a difficult concept for our “leaders” to understand? It works so much better than anything The Department of… is likely to come up with.
I know. The owner of the convenience store where I get my gas rides to work every day in his limo . . .
A patient of mine owns lots of gas stations in WV. He says he generally breaks even on gas, or maybe loses just a bit, over the course of a year, across all his gas stations. To John’s point, he tries to make money on everything else he sells in the convenience stores. He may do well on soda, but badly on candy bars, or whatever. It depends on supplier contracts etc. Staffing is always an issue, of course. Regulatory compliance is extremely complex.
It sounds like a really complicated business.
And people are always accusing the gas stations of price gauging whenever the supply goes up. Many don’t understand there’s a perfectly good reason prices rise quickly in a shortage, but fall slowly when supplies return . . .
I agree. I wish we could skip this debate but it’s one of those things that I feel there is a huge section of the population that simply won’t accept it. And yes, that was a great EconTalk episode.
Walter Williams
hashad a great argument on why anti-gauging laws were bad.“Why is supply and demand such a difficult concept for our “leaders” to understand?”
Whoa Jim! Our betters in guvmint are so way ahead of us and know exactly what they are doing. They have a plan and are executing it to a “T”. Soon we all will be able to enjoy the fruit of all their hard labors just like the folks in the South and Northeast are enjoying this fake gasoline crisis. It is clearly fake because the New York Times has pronounced it so. So there.
Furthermore, we can’t be criticizing our “leaders” anymore, particularly that fine fellow in the White House. Such criticism is now deemed a threat to “national security” and may be prosecutable under our great new regime because it might rile up all those incredibly dangerous “domestic terrorists” lurking almost everywhere particularly if that nasty fake news “alt right” so-called truth gets out to the public. Information is now only given out on a need to know basis and only to those people in good stead with woke culture, which clearly does not appear to be you. As you should know by now, dissent is no longer the highest form of patriotism any longer under our great new regime, so please cease and desist. Or else.
Price gouging is a moral problem, not a legal problem.
If you have the only supply in the area, you can set your price to whatever you want. Price gouging is going for maximum profit in that scenario, vs making enough to cover expenses and justify your effort. It’s a judgement call – weighing the social disapproval of ripping people off vs. money in the bank.
The government should not play a role.
James Lileks had a great discussion bit on this subject, on a past Northern Alliance Radio Network show/podcast. It was about things like the gas station profit margins, and how people yell about being “gouged” when prices go up but don’t make a peep about being “un-gouged” when prices go down.
And that’s the thing. You don’t have to pay the guy $1000 for a chainsaw after a hurricane, but if you truly need it, you buy it. Once others see the profit being made (absent anti-gauging laws), they’ll bring much-needed supplies and equipment, thus driving the price downward. Anti-gauging laws mean no extra supplies or equipment will show up period, unless the sellers are willing to risk the wrath of an overzealous DA . . .
I guess there is another economic element to anti-gouging. At a certain point, if you are charging enough money, people will decide that the chainsaw is worth more than their future freedom, and take it by force. There’s a reason most people don’t just try to extort the most money possible out of a situation like that.
If we could only harness the energy produced by Granholm’s wild gesticulating during her Democratic Convention speech years ago.
Those who don’t learn from history are bound to repeat it.