Ok, I can understand why people don’t think price gouging is a nice thing to do in the face of a disaster but is it actually illegal to do it? Isn’t it up to an individual or business to set their prices as they see fit (barring collusion/price fixing between competitors)? While perhaps it may be considered taking advantage of victims of a disaster isn’t it also Economics 101 stuff that low supply and high demand equals higher prices?
Price gouging is illegal on a state-by-state basis.
Here’s the press release on the Executive Order from Georgia’s governor.
States can and do interfere with the free market in a million ways, from minimum wage laws, to elimination of child labor, to maximum work hours. You can argue that one of the most important historic roles of the state was increasing checks and balances against the excesses of the free market. Although that’s a territory for GD, historically this is nothing new or unusual or out of place.
I agree that the state does and should interfere with the free market in a variety of ways (anti-trust laws for instance). But pricing a product based on supply versus demand is so fundamental to economics it seems hard to see how you mess with it. Further, where is the line drawn when the price gouging statute kicks in? Who is to say how much profit is too much profit? What if I am a station owner (I am not) who raises prices drastically but says that once that gas is gone none will be coming after it for awhile so my pricing covers, to some extent, lost income from being closed for who knows how long? Is the business owner expected to just suck up the loss?
States have a variety of laws and address those questions in various ways, but there is a matter of common sense here. One can legitimately quibble with whether the market is driving gas prices up to $3, $3.50, or even $4, in the current situation. However, you might remember after 9/11, gas stations started charging as much as $5 a gallon for… what reason?
Here’s one article that says that 58 gas stations in Indiana admitted raising prices in a gouging-like manner.
Regardless, the main utility of anti-gouging laws is not to provide a way to lock up retailers, but simply to dissuade them from seeking excessive profits during emergencies in which most Americans are opening up their wallets for charity, rather than seeking to enrich themselves.
If gas station wants to sell gas for $10/gal. (or whatever), there’s a rational reason for it. This simple fact never seems to faze those who believe gas stations are engaged in price gouging.
The bottom line is that there’s no such thing as “price gouging.” The price of gas at any particular gas station is solely determined by supply and demand (and taxes). As it should be. If gas station wants to sell gas for $10/gal., or $20/gal., or whatever, they should have every right to do it.
In Wisconsin, they can charge whatever they want (actually, there is a minimum markup), but they aren’t allowed to raise the price more often than once every 24 hours.
brian
Cite? In NY state, in the last 24 hours, gas station prices have raised 2-3 times depending on the station.
If there is a law barring this in Wisconsin, as you have said, then in the last few days, hundreds of station owners are in violation of this law.
So, cite?
Cartooniverse
You’re not exactly arguing that the Toothy Fairy doesn’t exist. Price gouging laws DO exist, and they DO prohibit certain types of activity. That is a fact.
You do realize that Wisconsin state law does not apply to New York gas stations, right?
In a similar vein, the vague definition of price gouging has caused problems. After the New York blackout a while back, one department store went ouf o tis way to go way south, buy generators (at full price!) and bring them back, all on its own dime. They charged a higher price because it cost them enormously
They were charged with “price gouging,” never mind that there woudl have been no more generators at all under the old price.
Let me caution everyone in this thread to keep your opinions out of here. If you want a debate, take it elsewhere.
I think that it has been established that gasoline prices and the relationship to gouging falls under state laws. And state laws vary.
What we need are more cites and less rancor.
Thank you.
samclem GQ moderator
I do indeed, Ravenman. I didn’t mean to be in any way rancorous and if I was, I apologize. Each state has it’s own unique statutes, of course. 
As another illustration, the Texas price gouging statute is here, at section 17.46(b)(27). It’s part of the broader Deceptive Trade Practices Act; among the prohibited business practices is the following:
The statute does not seem to define “exorbitant or excessive,” and a brief search did not reveal any case law elaborating on the concept. This suggests to me that, as someone mentioned above, the law serves primarily as a deterrent.