Recently, our diligent lawmakers in the House passed a bill that would make gasoline price gouging a federal crime.
I guess gouging the public with pork projects, bridges to nowhere, and subsidies to increase our daily costs is not high on their list of atrocities against U.
S.
constituents, but intervening in free market forces in an attempt to artificially cap commodity prices is deemed as a worthy cause.
I have a problem with this nonsense.
I can think of very few times where the country actually benefited from having the price of any particular good or service regulated by law, as opposed to free market capitalism.
It is a complete affront to our way of life and what made this country competitive, as well as the world leader in business and power.
Does price gouging even occur? Following Katrina, there were a couple instances where a news helicopter was hovering over a gas station portraying gas prices that were significantly higher than the rest of the nation.
This did occur on a sporadic basis and what was the effect? It limited the demand and preserved supply for those who needed it.
Imagine if gas continued to sell for $2.
50 in Louisiana at that time.
Since refineries, offshore platforms, infrastructure and the like were all damaged, there was no replenishment any time soon.
The supply of gasoline would have evaporated quickly and consumers would be left in the dark with no gas.
By hiking the price of gasoline to $3.
50 in the southern parts of the country, consumers bought what they needed and conserved additional supplies for other consumers.
This benefited more people in the end than having a couple folks guzzle up all the gasoline at once.
This sounds a little simplified, but this is how supply and demand works on an aggregate basis.
Is price gouging actually that bad? No.
This may shock some readers.
But, based on the argument previously, gouging actually ensures available supply for more consumers.
Here's a great example of the government gone wild in grabbing a quick headline and punishing gouging that actually helped a lot of people: Following Katrina, an enterprising man purchased several generators, threw them in a truck and drove several hundred miles to an area in Mississippi to sell them to citizens who needed generators.
As FEMA was completely useless, this was literally the only way for people to get their hands on a generator since they immediately sold out from local stores.
Since he invested his own money, had a rent a truck and invest his own time and risk in not selling them all, he certainly deserved some premium on his investment, no? The people in need of power were glad to purchase his generators at a 100% markup, as he advocated.
He did the area a true service in providing relief to those who would have paid much more.
What did he get for his efforts? Jail.
And the police confiscated his generators.
Is this any different than a 10 year old selling cold sodas at the town parade for a buck each? Sure, it probably only cost 10 cents a can in bulk, but I'd gladly pay a buck on a 100 degree day if the kid's walking by with a wagon.
This bill is silly for several reasons: The law is only triggered if the president declares a national emergency.
So, essentially, this won't help out this summer under the current conditions.
The language is vague and lacks definition: "if operators take unfair advantage or charge unconscionably excessive prices"...
this is just plain silly.
A judge must decide whether charging $3.
75 in one town is unconscionably excessive if a few towns over the price is $3.
50? Nonsense.
The White House then threatened to veto the bill due to the potential to bring back the long gas lines reminiscent of the 1970s.
So, the house knows the White House will veto.
What they're really trying to do is back Bush into a corner to veto so the Dems can say during election time that he vetoed a bill preventing price gouging (This isn't a political site, Republicans pull their share of similar nonsense as well, in all fairness).
If you ask any economist worth their salt what happens when you artificially cap the price of a good or service, they will remind you of these long gas lines.
We could very well see them again if this nonsense is taken too far.
If gas prices are artificially capped (artificially low), consumers will rush to get this deal and flood the gas stations to attain this good whose sale is mandated at below market values.
Let the free market dictate prices and set the demand; you'll see consumption decline (which might help out the environment a bit) and prices will fall back into place as supply catches up with demand.
People could go to jail for up to 10 years in prison and be fined up to $2million.
I'm sure we can all think of violent crimes committed against innocent citizens where no jail time was administered, corporate thefts of millions or dollars, etc.
where no jail time was assessed.
10 years in prison for allowing the free market forces to reign is simply Un-American.