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Which Is Better?

If your house was under water, would you rather have your family sleep in your car for free or pay $200 for a hotel room that is normally $100?

If you had an empty gas tank and had to get out of the path of a hurricane, would you pay $6.00 a gallon for a few gallons of gas that is normally $3.50 or would you rather just stay in the hurricane?

I see that three local businesses have been fined a total of $89K for price “gouging” in the aftermath of Sandy.  Well I say “gouging” is necessary and laws against it are detrimental to the safety and comfort of the population.

Long time readers have heard this rant before so you guys can move on to the next web site you check every day.

For you new guys, and there are quite a few of you, here we go:

Let’s say a hurricane is coming and your house is right in its path.  You have to leave and not waste any time.  Most people, even if they had half a tank, would fill the tank before they left just to be safe.  But suppose you get to the gas station and the price of the gas is doubled.  You say the heck with that, I have enough to go over a hundred miles so I’ll just get gas when I’m out of this area.

That’s perfect.

You now made gas available to someone whose tank is empty and really needs gas, even if he has to pay 6 or 7 dollars.  And maybe because the price is high he’ll only buy half a tank, putting even less strain on a resource that is temporarily in short supply.  By raising the price we are able to make sure the people who need it the most are able to get it.  Now you could force the gas station to sell it at $3.50 and have a cop check everyone’s fuel gauges on the line to make sure no one is hording.  But I think there are better uses for police manpower during an emergency.

Now let’s say there’s a gasoline wholesaler in Pennsylvania who hears that there’s a gas shortage in Jersey.  Now he’s not going to bother sending some tankers all the way to New Jersey to sell the gas at the same price he can sell it at locally.  But if he can double the price he’ll do it.  Isn’t expensive gas for a couple of weeks better than no gas for a couple of weeks?

So now you need to find a place to stay for a few nights until the water recedes and you can go back to your house.

Well you could go stay with your in-laws, but who the hell wants to do that?  For $100 a night you’d just as soon stay at a motel.  But when you get to the motel you find that it now costs $200 a night.  You say the hell with that.  At $200 a night for a motel, it’s better just to go to the in-laws.

Again, that’s perfect.

Because the hotelier raised the price and discouraged you from using a scarce resource that you didn’t really need, he made that motel room available to someone who doesn’t have family nearby to go to and would have had to sleep in his car or stay at a shelter.

Using government force to control prices always results in distortions and shortages.  The price signal is key to letting the market know what to produce and how much to produce.  But doing it, even if it’s politically popular, during an emergency can put lives at risk.

And really, what’s so terrible about a gas station owner or hotelier making a few extra dollars when he happens to own something that is suddenly in great demand?  It only lasts a few weeks.  It’s not like they’re making millions.

And don’t tell me that they are evil for benefiting from people’s misfortune.  If that were true than all doctors are evil too.


gas line

Hey, at least it’s only $3.50 a gallon.


  1. JB wrote:

    Where do you finding all of these pictures?

    Wednesday, May 14, 2014 at 3:14 pm | Permalink
  2. admin wrote:

    I am expert at Google image search.

    Wednesday, May 14, 2014 at 3:19 pm | Permalink
  3. Bk wrote:

    Shame to see so much of the ocean front parking being taking up by all of these grease trucks and ice cream stands, who is paying the parking meters loses of revenue.Why do we need all these trailers?

    Wednesday, May 14, 2014 at 4:33 pm | Permalink
  4. Anonymous wrote:

    What about the guy that doesn’t have the money to pay double?

    Wednesday, May 14, 2014 at 5:21 pm | Permalink
  5. admin wrote:

    If there’s nothing to be had what difference does it make? Besides, there’s all sorts of things that people can’t buy if they don’t have any money. Are we to make all economic policies based on people not having any money?

    Wednesday, May 14, 2014 at 5:58 pm | Permalink
  6. Anonymous wrote:

    There are those who would charge fifty times the regular price if there were not limits imposed during a crisis.

    Wednesday, May 14, 2014 at 7:33 pm | Permalink
  7. admin wrote:

    And they wouldn’t sell anything and would go broke.

    A voluntary transaction can only occur when each party considers what the other one has to be more valuable to them than what they have to give up. The seller doesn’t have to sell his product at a price that will be worth it to everyone. Why do that if there’s not enough supply to meet the demand at that price? You price things so demand equals supply. If that results in big profits for the seller then competitors will rush in and drive down the price.

    Thursday, May 15, 2014 at 4:57 am | Permalink

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