Price-gouging?

The Washington Times ^ | 9-29-05 | Richard W. Rahn

[JZelle]

If you bought a home 10 years ago for $100,000 and just sold it for $300,000, have you engaged in price gouging? Most people would say "no," provided there were willing buyers and sellers of both sides of the transaction merely responding to the market at the time. As a result of hurricanes Katrina and Rita, some politicians have demanded prosecution of "price gougers." In many states, like Florida, "price gouging" is illegal. The Florida statutes say, "It is illegal to charge unconscionable prices for goods or services following a declared state of emergency." Hmmm, I know what the law means when says burglary or murder are illegal, but an "unconscionable price"? So I looked in Webster's Dictionary, and found unconscionable is defined as "excessive; extortionate" and gouge is defined as "to extort from or to swindle." As an economist, I know prices allocate scarce resources (like gasoline) and motivate future production. At some price, the quantity demanded and the quantity producers are willing to supply come together. If that price is high enough to provide producers a profit, they will be motivated to produce more.

[Rodney King]

And if, after a set timeframe (let's say... a year), the oil companies cannot show a sizeable increase in refinery construction or expansion,

Uh, they can't. Do you have any idea how hard it would be to get a refinery past the regulators, environmentalists, and the courts? Perhaps you should do it, you can make a fortune.

[Rodney King]

Well, I guess I'd like to see that data if you can find it. It's not that I don't believe you, its just hard to comment on.

[tamalejoe]

Here's the most major thing wrong with your analogy: The republican party isn't going to get massacred in the 2006 elections because of what might have happened to the prices of houses in the last five years.....

[Protagoras]

I've read it a number of times. I have several copies. I give them to intelligent but ignorant people from time to time.

It was my first real introduction to freedom issues after I was old enough to actually think.

It was a long, long time ago.

[NYFriend]

From Consumer Union here
http://www.consumersunion.org/pub/0407-CU-CFAGasReport

Also See GAO 04-96 Energy Markets Effects of Mergers... from www.GAO.gov

[Rodney King]

Well, I read the first page and can tell you that it is junk. In addition to discussing gasoline prices, the guy claims that natural gas wellhead prices are also being increased because of market concentration, etc.

That is so off-base as to make me think the guy knows nothing. I used to work in corporate finance for a major natural gas producer. The idea that there is collusion is totally nuts. Not only is it very competitive, but there are even secondary trading markets to ensure such. Plus, there are endless numbers of natural gas producers. It is one thing to allege collusion in refinery production, but quite another in natural gas production.

[JZelle]

Here's the most major thing wrong with your analogy: The republican party isn't going to get massacred in the 2006 elections because of what might have happened to the prices of houses in the last five years.....



Dude, I didn't write the article. I merely posted it.

[eeriegeno]

If I was forced to buy a house every week and all of the houses were sold by a strictly limited amount of companies that colluded to set the price, then yes, paying $300,000 for a $100,000 dollar house would be price gouging. There is competition in the housing market, however, so I can buy a cheaper one. There is no competition in the oil market, so I cannot buy cheaper gas from a different station. The point this article's writer tries to make falls flat as an apples-and-oranges comparison.

Excellent response, and I agree 100%.......

[Sunnyflorida]

If the Republican party gers massacred over the price of gas it is our own fault for not making a bigger issue out of enviro-wackos and their democrat partners. The Republican's should have been pushing for more refineries and drilling all along.

[mysterio]

Every gas station in my area is charging exactly the same price. To the cent. About 40 gas stations. Hell of a coincidence.

[mysterio]

You cannot choose to not buy gas unless you are one of the retired oil company shills on this board. You cannot choose not to heat your home, unless you live in Hawaii. You can choose between renting a house and buying a house, and you can choose what kind of house you want. The comparison in the article is BS, and I think you know it.

[mysterio]

LOL. I have found that I actually agree with you on most of the topics you participate in, but not this one. People are compelled to buy energy and don't have a choice not to. They can reduce how much they buy, but they can't refuse to purchase any due to price. So once you've reduced it to a minimum, you might still be screwed depending on where you live. And if you are poor enough to be screwed, you are poor enough to not be able to relocate. The "choice" argument you have used in other threads falls flat.

Seriously good graphics, though.

[WasDougsLamb]

I was replying to mysterios' post. It is ok to disagree and have different opinions of things. I respect yours.

[Blessed]

>So once you've reduced it to a minimum, you might still be screwed depending on where you live. And if you are poor enough to be screwed, you are poor enough to not be able to relocate. The "choice" argument you have used in other threads falls flat.,

So the alternative is to let the Gov. set the prices and ration the gas like they did in WWI.Oh No my bad.People would just sell the ration coupons.I guess I just better let you handle it Commisar.

Either you believe in the free enterprise system or you don't.Which is it?

[Blessed]

>So once you've reduced it to a minimum, you might still be screwed depending on where you live. And if you are poor enough to be screwed, you are poor enough to not be able to relocate. The "choice" argument you have used in other threads falls flat.,

So the alternative is to let the Gov. set the prices and ration the gas like they did in WWI.Oh No my bad.People would just sell the ration coupons.I guess I just better let you handle it Commisar.

Either you believe in the free enterprise system or you don't.Which is it?

[PA Engineer]

"government subsidies need to stop for oil companies."

I can't wait to here this one. What subsidies?

[FreedomCalls]

Not like that around here. They ALL are within 2-3 cents of each other and ALL raise their rates on the same day. Within a few hours even.

I'mm not buying it. People are stupid. Earlier in the summer when my daughter and I were out, we stopped off and filled up at an Interstate off ramp in some small town somewhere. The service station on the opposide side of the road was a full 9¢ higher than the one I was using to fill up at. There were three cars over there filling up even as I filled up across the street for 9¢ less per gallon than they were. I pointed it out and asked "What's wrong with them?" It's insane to fill up over there. But they were. I have never encountered such a large price differential over such a short distance.

[Ichneumon]

Not like that around here. They ALL are within 2-3 cents of each other and ALL raise their rates on the same day. Within a few hours even.

If it's a reasonble price, there's no reason to complain, and if they're all overpriced, then you can make a ton of money by opening up your own gas station and consistently selling for less.

[FreedomCalls]

Every gas station in my area is charging exactly the same price. To the cent. About 40 gas stations. Hell of a coincidence.

That's pure unadulterated BS. Where do you live? If true, we'll look it up here: gasbuddy.com or here: gaspricewatch.com and verify that.

[mysterio]

Go back and reread what I posted. I have never advocated price controls. I do support anti-trust laws, though. And if it can be proven that the industry acted together to limit supply or to set the price artificially, I think they should be taken to task.

But I don't want price caps or fake gouging investigations. Price caps never worked and never will work. Competition works. I just want people to understand that buying energy is not a choice, it is a necessity. And collusion is and should be illegal.