Price gouging is taking advantages of temporary shortages or demand spikes caused by a natural disaster or other unexpected emergency to charge prices far in excess of what the market would normally bear.
Free enterprise is one method among many for determining the proper allocation of scarse resources. It’s just a tool – not some not an inviolate, absolute universal good. It tends to be a better solution than centralized control in most situations because in a free enterprise system the decision makers tend to be closer to the sources of information (I know how many lawnmowers I need better than somethin in Washington) allowing for supply to better track demand and for the system as a whole to respond more quickly to change.
Then the question is: Does price-gouging during a disaster do more harm than good? On the upside the promise of huge profits is a powerful incentive for people to transport scarse goods during an emergency. On the other hand, gouging feels fundamentally unfair to those being gouged (“What, you’re kicking me when I’m down?”) and the damage that it causes to the social fabric in times of crisis (when you really want everyone to feel motivated to pull together) may not be worth it.
Consider that often people will gouge even though they are not doing any extra work to justify the additional cost. For example, if you truck generators into a hurricane zone you have a better justification for gouging than if you’re a filling station owner who jacks up the price of the gasoline that’s already sitting there in his underground tank. This latter sort of gouging doesn’t provide any sort of positive economic incentive – it’s just profiting off the the misfortunes of others.
One could argue that gouging also encourages consumers to refrain from buying scarse resources during a crisis. However a large price spike will mean that the burden of doing without gasoline/food/lumber/whatever will fall inordinately upon the poorest members of the community – those who already have the fewest resources to weather a temporary crisis. In this situation, rationing is a fairer way to see people through the emergency.
The upshot is that gouging can only be justified if it can be shown to actually provide a real economic incentive during a time of crisis. Otherwise it falls in the category of other free market breakdowns like monopolies and usury where the minor advantages of maining a pure free market are outweighed by other greater disadvantages.