Holy crap, the Augusta Chronicle was our newspaper when I was a kid growing up there. Anyway, Economics 101 (and every socialist country in history, and gas here in the 70s, and minimum wage, etc) tells us that an artificially low price ceiling means greater demand than supply, and thus a shortage. An artificially high price (floor) means greater supply than demand, and thus a surplus.
During disasters, price spikes solves the problem of rationing. If a hotel room is normally $100 and forced to stay there, you might get a room for the kids and a room for yourselves. If the price jumps to $250, you’ll be much more likely to “make do” and squeeze your family of 5 into a single room, living a bit less comfortably but leaving a room available for a family that would otherwise be left out in the cold.
Or maybe you’re sticking around, but decide to stock up on bread “just to be on the safe side”. Normally your family goes through 2 loaves of bread per week at $1 apiece, but maybe you’ll grab 6 (why not). If you get to the store a few days in advance of the storm and see $4, you’ll probably think a little harder about whether you’re really gonna need 6 loaves...and the store isn’t going to have empty shelves.
http://townhall.com/columnists/WalterEWilliams/2006/05/31/economics_of_prices
Walter Williams on pricing
If the objective of the “anti-price-gouging” crowd is fair allocation of resources in an emergency, price-gouging laws have failed the objective.
If I’m not allowed to raise my price in an emergency to guarantee delivery to the customer that displays the greatest demand, I’m restricted to selling on a “first come first serve” basis at below market price. How is that more fair to potential customers?
Price is the medium by which supply informs demand. Price caps simply obscure the message.
It is a mistake to think of the local gasoline retail market as being comprised of many small, independent businesses, freely competing with each other on the basis of price.
The wholesale gasoline business is very tightly controlled by the large oil companies, their subsidiaries and business partners.
At the most there may be a few individually owned outlets but for the most part businesses that sell gasoline are owned or operated by a few large companies.
They may be company run or franchised, but the price they pay for gasoline and the price they charge for it is dictated by the oil companies and large gasoline distributors.
They also control what any independent sellers charge by controlling the wholesale price and in some (most) cases with contract language.
You cannot just build a gas station and call around town each day to see which distributor has the best prices. Most of them won’t sell to independents and those that do usually want a sole source contract. Without a contract it is very difficult to purchase gas at any time and almost impossible to find a reliable supply.
Additionally, many state and local governments have laws that prevent price competition by dictating the minimum selling price, allowable markup, etc.
The laws are usually given some misleading name like Fair Trade law, or Consumer Protection law, etc., to make it sound as if the purpose is to benefit the consumer, but in fact their function and effect is to benefit oil companies and gasoline distributors by preventing actual price competition at the retail level.
The stations that "gouged" did not run out of gas but did get a lot of complaints, especially when people had to buy gas at the "gouge" prices because the cheap stations had no gas. Lots of people called for the "gougers to be jailed. A very few people understood that the stations that "gouged" ensured that there would be gas available after the storm when deliveries were interrupted.
It is like the people who rush to the coast right after a hurricane selling 10 pound bags of ice for $50. They get arrested and jailed a few days later. The next hurricane, no one brings ice to the coast and there is no ice for anyone until local stores have electricity again and are making that $2 ice. And the people who complained about the $50 ice now complain about the a$$holes who didn't think it worthwhile to truck ice 50 or 100 miles down to not make back their expenses much less make a profit. It is as if folks believe that producers of goods are all independently wealthy people who can make unlimited amounts of goods and give it all away and profit is just the workings of vicious greed.
There are shortages because gouging is illegal?
Here in Sasser, countrys has had gas pretty regular. Raj kept gas until late Sunday, and has had it all day today.