Gouging, Please!

Gouging, Please!

By

Martin L. Cowen III

It is against the law in New Jersey to increase prices more than 10% after a natural disaster. This anti-gouging law is a man-made disaster. I am sitting here tonight, furious, watching video of the long lines of New Jersey people trying to buy gas from the few stations that have gas following hurricane Sandy. Nobody seems to understand the cause of the problem. THE PROBLEM IS THE GOVERNMENT! I so want to swear. What follows is the equivalent of 2 + 2 = 4 for Libertarians. It is alchemy for everyone else, and therefore idiocy. If you want to understand what is wrong, economically, with our world today, read on.

The gas station owners own their gas. They have the natural right to sell their product at any price they choose. Because Americans, generally, believe that everything is their business, they have authorized their governments to enact anti-gouging laws, which are a violation of the right to contract and the right of property and the right of free trade. Our motives include envy, compassion, and hatred of greed. We cannot stand the idea of a gas station owner charging a homeowner in need of gas for his generator $1,000.00 per gallon for the needed gasoline. Of course, the gas station owner has the moral, but not the legal, right to do so. So we get what we see in New Jersey tonight, traffic lined up for miles for customers to buy a limited amount of gas for $5.00 per gallon, or whatever. Idiocy. Let me explain.

In a free market, those gas station owners could charge any price they wanted for their own gasoline. The customers could buy or not. What would happen is that those people for whom gasoline now is very valuable would buy the gasoline at $1,000 per gallon. There would be no lines and those customers with the greatest need for gasoline and the ability to pay would have it. What else would happen? I, personally, would buy a tanker full of gas at a wholesaler in Atlanta for $3 per gallon and I would drive that tanker to New Jersey hoping to make a $997 per gallon profit on my purchase. But guess what? I would not succeed, because everybody else between Atlanta and Atlantic City, New Jersey, would do the same thing and the supply of gasoline in New Jersey would spike, extraordinarily. If I was quick, I might get $10 per gallon profit, though.

If the free market were able to function, there would be no shortage of gasoline in New Jersey beyond one day, if that.

But even if gas station owners were free to price their product as they choose, I am certain that I could not drive my tanker of gasoline into New Jersey. Why? Because, don’t you know, New Jersey (a really big government state) has laws against that kind of thing. I don’t have a business license for New Jersey. I don’t have an interstate trucker’s driver’s license. The gasoline from Georgia is not permitted, on environmental grounds, to be sold in New Jersey. The unions would not permit a non-union punk like me on their turf. Et cetera, et cetera, et cetera.

You see, it is Government interference that is causing the long lines for gas in New Jersey.

Economics is simple. At the right price, supply and demand reach equilibrium.

Expletives deleted.