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.
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 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.
Gouging is superior to hoarding.
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?
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