Posted on 11/03/2012 1:55:01 PM PDT by sickoflibs
In New Jersey there is a shortage of open gasoline stations not because of the supply of gas but due to lack electricity at gas stations. This has caused long lines due to form miles long and lots of frustration. The media is reported thousands standing in line waiting to buy gasoline.
So NJ Gov Chris Christie has just announced a form of gasoline rationing of odd and even buying days. At the same time he is prosecuting merchants for raising prices in response to the shortages; and I am sure this is very popular there: ' Procecute those greedy capitalists because price gouging is unfair' I can imagine them saying.
But suppose gas stations and stores selling generators were allowed to raise their prices legally. Wouldn’t that not only reduce demand some but more importantly wouldn't it bring in a greater supply of generators from other parts of the country to NJ? I mean would you stop your life to buy up generators and drive them to ravaged NJ just to risk prosecution?
Would you rather buy more expensive gasoline, or have NO gasoline being sold to you if you are out of it?
The first time I read Thomas Sowell was about 1991 in the NY Post and he made this exact argument. I have tried it a few times a few times with real people and it always provokes anger. The rule seems to be that ‘fairness trumps effectiveness’.
Yet not one of those who got mad (generally libs or RINOs) ever suspended their own lives to buy supplies and bring them to hurricane ravaged areas. They just sit home comfortably and bask in their warm smugness of being for 'fairness'. Rationing+price controls=fairness
Three linked sources below :
According to AAA, 60 percent of the gas stations in New Jersey and 70 percent on New York's Long Island are closed. That isn't a result of gas shortages, but rather because electricity in the area is spotty and gas pumps require power to operate.
In New Jersey, about 100 consumers have called the attorney general’s office to complain. There are reports of gas stations raising prices by as much as 30 percent in a day and hardware stores charging twice as much for electric generators as they did before Sandy.
That would put merchants in violation of the state's anti-gouging law, which bars price hikes of more than 10 percent in an emergency. New Jersey's law is unusual in that sets a specific price increase threshold in defining gouging. Of the 30 states that have such laws, only seven set a specific level of increase — either 10 percent or 25 percent — that constitutes gouging.
After Sandy, allegations of price gouging (CBS News MoneyWatch November 2, 2012)
TRENTON, N.J. — Motorists in 12 northern New Jersey counties will be allowed to buy gasoline just every other day under an order by Gov. Chris Christie .
Gas lines were long at some gas stations Saturday morning with motorists trying to make purchases before the noon switch to a gas rationing system.
Drivers with license plates ending in an even number will be allowed to buy gas on even-numbered days, and those with plates ending in an odd number can make gas purchases on odd-numbered days.
Christie hopes the rationing will ease long wait times at gas stations and prevent a fuel shortage in the state hard-hit by Superstorm Sandy
Chris Christie Orders Gas Rationing In Some Counties (11/03/12 AOL News@Huff Post)
The New Jersey Attorney General’s Office has brought charges against 65 businesses accused of price gouging in the aftermath of Sandy, the office announced Friday.
Gas stations, convenience stores, restaurants, hotels and stores selling emergency supplies such as generators were among the businesses charged. The businesses are located across the state, but the charges were concentrated in Bergen, Essex, Middlesex, Monmouth, Ocean, and Passaic Counties.
“Fuel, electricity, food, and a place to sleep are not luxuries, certainly not for individuals who have been displaced from their homes and in many cases have limited resources at their disposal,” Gov. Christie said in a statement.
N.J. cracks down on price gouging, ( Philly.com NOVEMBER 2, 2012)
Rationing+price controls=fairness
‘Rationing+price controls=fairness’ ping!
Rationing+price controls = empty shelves, gas lines, uniform despair = fairness
Most of the people who manage to buy the items at the “non-gouging” price go out and sell it at the gouging price anyway.
It’s freshman economics. Price leads to limited resources going to where it is most useful. Plus high prices provide motivation to other suppliers to get bring in supply.
NJ also has that law that you are not allowed to pump your own gas, you must wait for an attendant.
If you ever tried buying gasoline on the NJ Turnpike you would learn to buy it before entering that state, because they always have lines.
And that is probably 100% safe to the sellers because they are not a business.
Although you are not guaranteed a useful product buying them in the shadows from strangers, rather than (if it was ) legal from a business.
Short answer is yes. I live about 130 miles from the Jersey Shore. If the price was right and what I describe was legal in NJ, I would do the following. I would gather several of my neighbors, rent a truck, buy needed goods, then travel to NJ to sell stuff at a premium. I would make sure that we are armed with AR-15’s and pistols to protect ourselves. This is no different than what the National Guard would do. For me to do it, there would have to be a profit, a nice profit and it would have to be legal.
People who need gas will pay what the market will bear. Those who need it less will not buy as much, reducing waiting times as the prices increase. When the market price goes higher, it will incentivize new sellers to enter the market. As new sellers enter the market, supplies will increase and prices will decrease.
That came right from The Communist Manifesto, but you know that, Correct?
Works in every Communist Nation...
You would be "preaching to the choir" at the Democratic Underground.
High prices cure themselves.
During a disaster, business owners who price gouge people are likely to meet arsonists. That is reality.
No matter the good intentions of your market rationalizations and logic, don’t even try it during a disaster. It’s seen as piling on; dishonorable.
Businesses who get up and running fast to supply people’s needs and are businesses that gain in huge respect and loyality from customers. They are seen as local heros. Businesses price gouging people will experience the opposite effect - forever.
Your (tinged with Marxism) fairness formula may be necessary in situations of total war, or other massive disasters, where there is no hope of adequate resupply. That does not apply to the situation in New Jersey.
New Jersey is surrounded by an entire continent full of essential goods and a still-functioning infrastructure. If prices are allowed to adjust to market conditions; the supply will be there. The price rise would not have to be very great either. (Talk elsewhere, of $15.00/gallon gasoline is just nonsense.)
If prices are just above the cost of doing business, goods will be supplied. If prices are set even a tiny amount below the cost of doing business, no goods will be supplied. This has been proven many, many times — at the cost of millions of lives lost due to unnecessary famines.
The trouble with price controls, rationing, and anti-gouging laws is that they fail to allocate scarce fuel to those who need it most. The fellow with the gas can who wants gasoline for his leaf blower stands in the same relation to the seller as the fellow who needs to put the gasoline in the car to be able to take his wife to dialysis treatments. And the driver of the car behind them may already have half a tank but is panicked and wants to fill up every day. Let the price float to a market clearing rate and the person who really needs the gasoline will dig down deep and spring for it, while the two who want to fill up their leaf blower and top off to quell panic attacks will wait until later.
Let the gummint get involved and they’ll f**k it up every time. Some of the New Jersians lined up to buy gas are probably just trying to make sure they have enough fuel for a planned trip into the Poconos this weekend to check to see if there is any late fall color - they can damn well wait. Let the guy who needs to fuel to make sales calls on his customers pay whatever he can afford to fill his tank.
It always has
Raising prices to reduce demand is itself a form of rationing, the difference being the means and who makes the decision.
What price level would it take to significantly reduce demand? How fast does a station raise its price/let it rise to that level?
I have no reason to believe a station owner is more rational in deciding who gets fuel than anyone else.
One important effect of keeping the price of fuel near normal in price but rationing the amount is that most people will realize that they are being treated with an even hand.
Charging one person $15/gal. and another $5/gal. might well start a riot.
Rationing the amount spreads a scarce product to the greatest number of those who need it instead of the fewest number that can afford it.
1. With so many gas stations closed, the problem isn't the price of the fuel -- it's the lack of capacity to have it delivered to customers. Allowing gas stations to charge $15/gallon isn't likely to help this situation in most respects, since even most stations that have been resupplied are running out before their next delivery comes.
2. One exception to this would be those gas stations where a large generator could help get the station open. The problem, as I've heard, is that gasoline is sold on such a small profit margin that the profit on the sale of every drop of gasoline in the station's inventory isn't enough to cover the cost of getting a generator in place and running it for several days. This is the type of situation where price "gouging" might be an effective way to get more gasoline out to customers.
3. There's an added complication this year in New Jersey because so many people bought generators after Hurricane Irene in 2011 -- and many of those people are now standing on line at gas stations hoping to fill containers of fuel to keep their generators running while they have no power. Motorists are basically competing with homeowners who have no power for the limited supply of fuel available.
4. The "fairness" issue goes out the window once you're dealing with people who are facing a desperate need for gasoline, as opposed to having a discussion with a bunch of @ssholes who insist on "fairness" from the comfort of their home, office, or local Starbucks. Ask anyone standing on line at a gas station in New Jersey today if they'd rather buy 10 gallons of fuel at a price of $10/gallon or buy 0 gallons of fuel at a price of $3.50/gallon. I'd be shocked if a single person answered the latter.
That's mainly because the Turpike service areas simply don't have enough fuel pumps to meet even the demand for even a typical peak weekend day.
Despite the law against self-serve fuel in New Jersey, we actually have some of the cheapest gasoline in the nation in this state. That's because the state fuel tax is one of the lowest in the country.
People are having hard enough time prior to the Cane and now you want to burden them more because the supplier cannot deliver!
How stupid a proposal is this!
Yeppers, you guys are screwed so we gonna screw you more!
Get some Military Gas trucks and get these people some gas
for free!
My God Afghanistan needs another 100 billion!
And Americans should suffer and bare the load!
It’s the Barrakian Way!!!!!!!!!!!!!!!!!!!!!!!!!
Send the Wookie to Paris to pick up some new Fasions!
Sandy Victims Eat your Cake!
That is an assault on the price system. In a free society, the price system is one of the institutions that are pillars of a modern division of labor which is necessary for a modern process of production which is necessary to produce wealth. Wealth is one of the real goods that individual and society needs for happiness.An assault on the price system harms everyone in the long run.
The answer in our situation is a resounding NO.
Because existing supply is prepositioned in the consumer facing end of the supply chain.
Raising prices would create adverse incentives to the chains of gas integrated wholesalers/retailers and confederated station owners in the region.
And, given your beliefs about the free market, I suspect you'll be voting for Obama? After all, the free market is just people dealing with people for their mutual well-being.
We wouldn't want that would we.
It's just incredible the extent to which Marxism has permeated American conservatism.
Gouging is superior to hoarding.
Let the price rise to meet demand and you have a much better chance of more people getting what they need instead of what they want.
Thanks
This is exactly the one I was thinking of. Allowing gas station owners to charge what buyers are willing to pay, rather than the lower price that the state dictates, could provide a strong incentive to bring in generators to power more gas stations getting more people gas and slowly lowering the prices again as more come on line.
The way it is now station owners might as well just close early with these rules leaving consumers with nothing for standing in line.
But fairness trumps practical economics when the elected gubment decides.
Are you trying to claim that communism didn't work? North Koreans are the happiest people in the world. Life is fair there. No gouging there.
So NJ Gov Chris Christie has just announced a form of gasoline rationing of odd and even buying days. At the same time he is prosecuting merchants for raising prices in response to the shortages; and I am sure this is very popular there: ‘ Proscecute those greedy capitalists because price gouging is unfair’ I can imagine them saying.
Under the circumstances, could you blame a station owner who just shuts down to avoid the hassle?
You’re close, but wrong. High prices send a market signal and cure themselves through arbitrage or repairing the supply/demand shock.
Government regulations on gas blends limit the ability to shift gasoline, but price flexibility, desparaginly called “price gouging”, acts as a clarifier both for supply and demand.
Imagine the situation where a butcher has thousands of dollars worth of meat at meat at steak v. the person who wants to keep the television and refrigerator running. At $15/gal the market will clear only for those who need it most. If both of the above face the same pricing then their is a mismatch because the market clearing price is obviously higher. The people who need it least get too much and the people who need it most get to little. Supply remains the same because potential suppliers don’t gain anything by entering the market.
See this example from NC: http://www.econlib.org/library/Columns/y2007/Mungergouging.html
Price gouging laws are stupid and high prices cure themselves.
I can agree with the rationing. The price control is BS unless you can protect the station from huge increases in his next delivery. I would personally shut the business until the gov gets out of the way
Rationing+price controls = empty shelves, gas lines, uniform despair = fairness
Fairness is a word I have come to despise in the last four years. No one ever mislead me to expect fairness in life. Anyone who does is delusional
NJ also has that law that you are not allowed to pump your own gas, you must wait for an attendant.
I’m sure those union twits are really doing yeomans duty in pumping that gas too/s
Businesses price gouging people will experience the opposite effect - forever.
How do you define “price gouging”? I say it’s mine and it’s not for sale. You want it at any price, should I be forced to sell it at your price or not sell it at all if it’s not what I would take?
Businesses price gouging people will experience the opposite effect - forever.
How do you define “price gouging”? I say it’s mine and it’s not for sale. You want it at any price, should I be forced to sell it at your price or not sell it at all if it’s not what I would take?
Christie’s channeling Carter or maybe Obama rubbed off on him. These stupid Eastern Publicans.
Gouging is superior to hoarding.
Don’t doubt the jerks who are hoarding too. That is one reason that rationing is not a bad move.If you want to hoard, do it before the disaster
I guess that went out the door really quick after this storm.
Don’t bet on it. That’s probably what had the lines so long
Dear libertarian figment of Ayn Rand’s imagination. You are not “forced” to sell anything. You can show everyone and close down during a disaster. Republican and Demonrat States forbid price gouging. Why? Because they don’t want businesses burned and looted. They are not darwinists.
Just so you know, price gouging is raising your profit margins on items beyond what is your profit margins were prior to the disaster. So if the widgets cost you more than before the disaster, you can charge more.
During a disaster, business owners who are quick in getting going again, make lots more business in volume of sales. So in a way, they benefit in profit from a disaster without taking advantage of people’s suffering and ripping everyone off.
Sure, put a surcharge on the gas to pay the extra expense of using a generator and having an electrician wire it up. Put the generator out where everyone can see it and hear it running. Put a sign on it too explaining the surcharge is paying for the thing.
There is a more practical reason for not interfering with the natural market price mechanism posted here #26 than that.
A'sC picked up on it.
Not bad. That would deter some of the hard feelings.
Like I said, the first time I was introduced to Thomas Sowell was when his editorial appeared in the NY Post around 1991 making the case that gouging should have been allowed in FL after a hurricane because it would result in better consequences than rationing.
I had never heard anyone nuke the conventional popular wisdom with logic before that.
I don’t agree with giving away gas. That a Marxist ploy by britches boy in the White Hut.
I addressed the advocacy of price gouging during a disaster.
You are not “forced” to sell anything
You are though, forced to sell at the governments chosen “fair price” if you sell at all .
You are stuck on Obamas’ fairness BS
And, given your beliefs about the free market, I suspect you’ll be voting for Obama?
No they don't. They prosecute those for selling gas at the price that buyers are willing to pay because stupid voters are seduced by the imaginary concept of fairness, and they don't understand basic economic principles.
In this case allowing raising the price of gasoline to what buyers would pay for it would bring the buyers more gasoline. With these price control laws the voter is saying they would rather have people in their state with no gasoline at all and wait on lines a mile long then let them pay a higher price for actual gas in their tank.
RE Just so you know, price gouging is raising your profit margins on items beyond what is your profit margins were prior to the disaster. So if the widgets cost you more than before the disaster, you can charge more. ”
No that is wrong. Price gouging is raising the price of your product to what the buyers are willing to pay for it. If they can get a better deal else-where they will. Maybe they can drive to PA and buy some cheaper.
BTW : I appreciate your contrary arguments. It makes the thread more interesting and fun.
You are though, forced to sell at the governments chosen “fair price” if you sell at all .
In Christie’s rinoland, you are dealing with rationing. Prices are not fixed. Profits are fixed to prevent lowly scum from benefiting off the suffering of others during a disaster. Really, it can be seen as a fire prevention insurance plan.
When we talk of prices we're talking about rationing by price instead of some other method.
As to desirable consequences the question is desirable to whom? And why?
If the goal is to alleviate the need of the largest number of people to the degree possible during an emergency, that is one goal. If the goal is keeping a supply/demand market going on with supply being able to charge until the demand can't meet the price and lessens that is something else.
If the goal is to restrict supply to those “who really, really need it”, raising prices is not an efficient way to do it.
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