[cmeisenzahl]

This is a good one:

In praise of price gouging
John Stossel
September 7, 2005
http://www.townhall.com/columnists/J...20050907.shtml


"Politicians and the media are furious about price increases in the wake of Hurricane Katrina. They want gas stations and water sellers punished.

If you want to score points cracking down on mean, greedy profiteers, pushing anti-"gouging" rules is a very good thing.

But if you're one of the people the law "protects" from "price gouging," you won't fare as well."

[Maflynn]

I don't think its the gas stations that are gouging (for the most part). You can blame the oil companies who jack the price up in a moments notice. Big oil has a friend in the white house and they pay a ton of money to Pacs and the like so congress doesn't really do too much either.

I believe if we see any action on this it will be because the inflation will rear its ugly head. Gas/oil is the one thing that is used every step of the way for every product.

Mike

[Moderator]

As was mentioned in another thread Exxon made $33 Billion last quarter...they are selling something we need..not something we want....and they know it. Its criminal.

[Millennium]

This is an interesting take on the matter, though I'm not sure I buy it completely. Certainly high prices can drive demand down to a point where supply balances out, but that only works when the market isn't captive. The law of supply and demand requires all parties to have free choice in the matter; sellers must be free to sell or not sell as they desire, and buyers must also be free to sell or not sell as they desire.

Right now, we're not in that situation. Stossel's example of water is a poor one for his cause: people must buy water, and so gougers can charge whatever they want and expect to sell handsomely. Similarly, right now most people must buy gas -they lack the resources or live too far away to use other methods- and the gougers can exploit that ruthlessly. Certainly their prices ought to be able to increase as their costs increase, but the current situation seems more than a little excessive.

When we last had a thread about this, I mentioned that some investigation needs to happen to see exactly what's going on. Since then, I've learned that the state of New York is apparently conducting such an investigation, so we'll see how that goes. I've seen individual gas stations engage in shameless gouging well above what we see on average, but I've also seen these stations' parent companies step in and put an end to that when it happens. If there is gouging going on, it would require that the gas companies working together to fix prices industry-wide. That's not impossible -it's happened in other industries in the past- but the consequences of being caught can be severe enough that even the oil industry would have to think long and hard before going through with it.

[turtle777]

Originally Posted by Moderator

As was mentioned in another thread Exxon made $33 Billion last quarter...they are selling something we need..not something we want....and they know it. Its criminal.

I don't see why it is criminal. Their ROS tends to be in the 10% range. That is fairly normal, not even close to Microsoft with a ROS of 22% in 2004.

-t

[saddino]

Originally Posted by Moderator

As was mentioned in another thread Exxon made $33 Billion last quarter...they are selling something we need..not something we want....and they know it. Its criminal.

In my gut I agree, but I don't actually understand why "price gouging" is criminal. True conservatives (including fiscally conservative Democrats) believe in the power of the free market to regulate itself. In a true free market, there is no concept of "unfair price" - only the price that the market will allow. If people are content to buy gas at $6/gallon then what is "criminal" about it? Isn't it safe to assume that one or more competitors will price more fairly, gain the "gouging" company's market share and thus (eventually) force the "gouging" company to reduce their prices?

If someone is implying that the oil companies are colluding to fix prices unfairly, then I agree, that is criminal.

But otherwise, isn't "price gouging" simply immoral, not "criminal"?