http://www.townhall.com/opinion/columns/thomassowell/2005/11/16/175725.html Where particular states have passed laws against "price gouging," their different definitions reveal how slippery and arbitrary the concept is. Kansas attempts to define price gouging as selling at prices more than 25 percent higher than they were before some disaster. Georgia makes it illegal for prices to rise after the state government has declared a state of emergency, unless the seller can prove that his costs have gone up. What all this boils down to is that prices higher than what observers are used to are called "gouging." In other words, prices under normal conditions are supposed to prevail under abnormal conditions. This completely misunderstands the role of prices.
The day hurricane Katrina hit New Orleans gas stations in Atlanta raised prices as high as 6 dollars a gallon. The average price was around 4 bucks a gallon for about a week. I know the price the stations paid went up after the storm, but the gas they had sitting in their tanks before the storm did not suddenly cost them ten times as much.
I have another column from Walter Williams where he addresses that question. He said the price on the sign for a gallon of gas is not the price the station paid for the gas in their tanks. It's the price at which they will have to pay to refill their tanks to continue to sell. If Racetrack doesn't begin to charge what the price to refill is, they won't have the money to pay the new price beinig charged to them.
On top of the Congressional nonsense, oil companies have contributed far more to the government through taxes than they have ever taken in through profits. Is anyone investigating the windfall profits of the government? Over the past quarter century, oil companies directly sent more than $2.2 trillion in taxes, adjusted for inflation, to state and federal governments — three times what they collectively earned in profits over the same time period. Yet some politicians say this is not enough and are proposing a new “windfall profits” tax to raise billions more for federal coffers. http://www.nationalreview.com/nrof_comment/hodge200511160837.asp
That's still a crap arguement. The gas in the tanker trucks is already bought. Most stations high volume stations get invoiced for their gas a month in advance. So for a month, and in some cases more, they see no increase in order costs. The real price increases, those based on increases in costs, should not be reflected until the next invoice which is a month away.
Well, it's not really. We're not talking about gas in a tanker already being paid for. One day the price of gas is $2.00....hurricane hits.......next day it's $2.15. We're talking about the future production of gas in getting to a station. Whether or not Racetrack has prepaid for gas for the following month, at some point the increased cost of production will be passed onto the station then consumer. And secondly, some stations fill every other day or so. Not on a per month basis. That's why pumps were cut off at some stations. They were running out of gas and the gas they had and were selling, the price went up for the future purchase price of gas. This isn't a monthly cable bill.
what do you mean "should"? if i own a gas station, and i know gas is about to start costing me much more, then i would raise prices now. i dont understand the attitude of telling people what their items "should" cost. it is their decision, not mine. if they fear the coming prices and want to raise theirs now so they will have some cash ready, then who are we to question it?
I haven't really made up my mind on this issue. I don't think the government should interfere in business in a general sense, but there are two areas, food and oil, that must be looked at indenpendent of typical goods in order to gain a proper understanding of how they impact the economy of our country as a whole. The problem with sky high oil prices, as I see it, is not the squeeze it puts on us when we go to the pump to fill our tanks. As long as there is no shortage, I can adjust. I can carpool to work and stay at home when I would otherwise be driving at leisure. This would be detrimental to many businesses, however, as I would offset my higher fuel bill by eating out less, going to fewer ballgames, movies etc. In the long run I could balance my bank account to lessen the blow of high gas prices to the point I might not even notice. However, business in general would suffer. What is being overlooked in this discussion is the price of diesel. Truck drivers don't have the luxury of driving less to offset pump prices. The only alternative they have is to increase their price to transport goods. Higher fuel prices eventually raise the price of almost everything we buy. Food, clothes, light bulbs, lumber - you name it... the price of diesel will be passed on in the prices we pay for all of these. If the price of a coke goes up 50%, it doesn't cause the price of everything else to increase. Oil is unique, in that it does. I think, at least I hope, the government's concern over this issue is rooted in the fact that for one industry to be able to take so many consumer dollars out of circulation for the rest of the business world is extremely dangerous, in my opinion. The actions of this one industry could throw our economy into a recession. I will say, the government's failure to promote the creation of alternative fuels has played a major role in getting us where we are today. Since consumers elect our government official, we too must shoulder some of the blame. Now we have to watch the government as they attempt to correct earlier mistakes. Hopefully the end will justify the means.
First off I am not talking about a 15 cent hike. I mentioned a 2-4 dollar hike in gas prices. Secondly most stations, even the low volume ones, will buy a months worth of supply at a time. Their is no incremental cost on the gas that came post storm for several weeks. I understand that stores wantto maintain profit margins and must hike prices, but a 2-4 dollar hike before they even have any idea how the market will react is price gouging.
Consumers are more to blame than anyone. We don't believe in conservation. We don't want change. We simply want cheap energy! We like fast and big cars. We crank the AC down low during the summer and fire up the heat during the winter. We are the richest nation and can afford it. Sadly, we are looking to our government to solve this problem. Meanwhile, we continue to drive our hummers and SUVs. We continue to consume all the energy we can afford.
