For those too lazy to click the link and read the article, Alabama Governor Bob Riley delcared a state of emergency with regards to the potential for fuel shortages caused by Hurricane Ike. Thanks Gov. Riley. Thanks a lot.
Anytime a state of emergency is declared, a state “anti-price gouging” law goes into effect to “protect” consumers from “unconscionable pricing.” Not only do I think that “fuel shortage” does not constitute a state of emergency, but I think Gov. Riley greatly aided this shortage by declaring the state of emergency.
I got a call last night from my dad. He found a great deal for a piece of restaurant equipment in Alpharetta, Georgia. By going to pick this item up and meeting my father halfway to give it to him, our restaurant would save about $1500. I stopped at an Exxon station after work to get gasoline. The station, which was selling Regular Unleaded fuel for $3.57, was out of all gasoline. Still having a quarter of a tank, I didn’t want to deal with finding a gas station at midnight.
This morning, as I left town for Alpharetta, I found that almost all gas stations were out of fuel, and found one with only premium gasoline left.
Why did this happen?
Because gas stations were not allowed to control their supply by appropriately raising their prices. Every panicky Pete and Patsy ran off to fill the tank of every vehicle in their household (and gas cans too) at the declaration of this state of emergency. Had gas stations been able to sufficiently raise their prices, this may have dissuaded some of our more eager citizens from going so hogwild at the pump, depriving people in immediate need of gasoline and leaving them literally high and dry.
No one likes to think about paying $6 or $7 per gallon when a hurricane hits, but there is one simple solution when that occurs. DON’T BUY GASOLINE. At most, buy only what you need. Hedge yourself by buying in small amounts to dollar cost average a full tank.
Instead what we have are laws against “price gouging” (which is a completely baloney term) that promote excessive consumption and mob-like hoarding. Don’t be fooled. The fact that gas stations are out of gasoline is not a result of Hurricane Ike; it’s a result of Gov. Riley’s unnecessary declaration of a state of emergency and the bogus price gouging laws that exist on the books in Alabama.
More fun reading on “price gouging”:
Price Gouging on Wikipedia
Price Gouging Saves Lives
Gasoline Price Gouging Laws Will Not Benefit Consumers
Fun fact: This is one of the only issues that you will probably ever see me link to both the Mises Institute and The Heritage Foundation, but trust me, the math is right on this issue.