# Is price gouging actually illegal? **URL:** \ **Category:** Factual Questions\ **Created:** [September 2, 2005, 12:47pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728 "2005-09-02T12:47:26Z")\ **Posts on this page:** 12\ **Page:** 1
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [September 2, 2005, 12:47pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/1 "2005-09-02T12:47:26Z")
> [@](#): > > President Bush today called for “zero tolerance” of looters and price gougers exploiting the chaos of Katrina’s aftermath, saying Americans must take personal responsibility for keeping order in the wake of a terrible disaster. > > SOURCE: [http://www.chron.com/cs/CDA/ssistory.mpl/special/05/katrina/3334577](http://www.chron.com/cs/CDA/ssistory.mpl/special/05/katrina/3334577) 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? ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [September 2, 2005, 12:53pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/2 "2005-09-02T12:53:57Z")
Price gouging is illegal on a state-by-state basis. [Here’s](http://www.gov.state.ga.us/press/2005/press907.shtml) the press release on the Executive Order from Georgia’s governor. > [@](#): > > Governor Perdue Signs Executive Order Enacting Georgia’s Price Gouging Statute > ATLANTA – Governor Sonny Perdue signed an Executive Order today enacting Georgia’s price gouging statute to protect Georgia consumers from unlawful increases in gas prices and other products. The Governor’s Office has received today credible evidence that price gouging has occurred in parts of the state. > > “We will not tolerate the exploitation of Georgia consumers as we recover from the effects of Hurricane Katrina,” said Governor Sonny Perdue. “Violators of this price gouging statute will be punished to the fullest extent possible.” > > Citizens are asked to report any suspected incidences of price gouging to the Georgia Office of Consumer Affairs at (404) 651-8600 or (800) 869-1123. Any violators of Georgia’s price gouging statute will be punished to the fullest extent of the law. > > Georgia’s price gouging statute prevents retailers from selling goods or services at an unreasonable or egregious price. Georgia’s price gouging statute does not prevent price increases that accurately reflect an increase in the cost of the goods or services to the retailer, an increase in the cost of transporting the goods or services into the area, or an increase due to the market forces of supply and demand. > > For example, a retailer may increase the price of their products as is necessary to replenish their existing daily stock at current market rates, maintaining the same markup percentage he or she applied prior to the enactment of the price gouging statute. 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. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [September 2, 2005, 1:03pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/3 "2005-09-02T13:03:19Z")
> [@Exapno Mapcase](#): > > 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? ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [September 2, 2005, 1:16pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/4 "2005-09-02T13:16:40Z")
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](http://www.indystar.com/apps/pbcs.dll/article?AID=/20050831/BUSINESS/50831008/0/NEWS01) 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. ---
**Author:** ![Crafter\_Man](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/crafter_man/32/458_2.png) [@Crafter\_Man](https://boards.straightdope.com/u/Crafter_Man)\ **Post date:** [September 2, 2005, 1:24pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/5 "2005-09-02T13:24:02Z")
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. ---
**Author:** ![N9IWP](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/n9iwp/32/3154_2.png) [@N9IWP](https://boards.straightdope.com/u/N9IWP)\ **Post date:** [September 2, 2005, 1:35pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/6 "2005-09-02T13:35:49Z")
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 ---
**Author:** ![Cartooniverse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cartooniverse/32/3084_2.png) [@Cartooniverse](https://boards.straightdope.com/u/Cartooniverse)\ **Post date:** [September 2, 2005, 1:54pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/7 "2005-09-02T13:54:42Z")
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 ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [September 2, 2005, 2:31pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/8 "2005-09-02T14:31:15Z")
> [@Crafter\_Man](#): > > The bottom line is that there’s no such thing as “price gouging.” 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. > [@Cartooniverse](#): > > 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? [One.](http://badgerherald.com/news/2001/10/04/fifteen_gas_stations.php) [Two.](http://www.wbay.com/Global/story.asp?S=3785126)[Three.](http://wispolitics.com/index.iml?Article=43384) You do realize that Wisconsin state law does not apply to New York gas stations, right? ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [September 2, 2005, 2:59pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/9 "2005-09-02T14:59:13Z")
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. ---
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [September 2, 2005, 4:56pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/10 "2005-09-02T16:56:04Z")
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 ---
**Author:** ![Cartooniverse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cartooniverse/32/3084_2.png) [@Cartooniverse](https://boards.straightdope.com/u/Cartooniverse)\ **Post date:** [September 2, 2005, 5:32pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/11 "2005-09-02T17:32:46Z")
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. 🙂 ---
**Author:** ![TJVM](https://avatars.discourse-cdn.com/v4/letter/t/b38774/32.png) [@TJVM](https://boards.straightdope.com/u/TJVM)\ **Post date:** [September 2, 2005, 5:36pm UTC](https://boards.straightdope.com/t/is-price-gouging-actually-illegal/319728/12 "2005-09-02T17:36:55Z")
As another illustration, the Texas price gouging statute is [here](http://www.capitol.state.tx.us/statutes/docs/BC/content/htm/bc.002.00.000017.00.htm#17.46.00), at section 17.46(b)(27). It’s part of the broader Deceptive Trade Practices Act; among the prohibited business practices is the following: > [@](#): > > taking advantage of a disaster declared by the governor under Chapter 418, Government Code, by: > (A) selling or leasing fuel, food, medicine, or another necessity at an exorbitant or excessive price; or > (B) demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine, or another necessity. 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.