Price Gouging Laws Are Evil

Thursday evening, the people of western North Carolina (and beyond) went slightly nuts and had a panic run on the gas stations...emptying many of them with an unusual demand on a limited resource that has to be trucked into the region. I posted about it and made a video mocking those idiots.

The Governor of North Carolina has decided that prices should not rise more than 20 cents a gallon and has instructed the Attorney General to enofroce the state's price gouging law.

Let me quote a regional blogger on the function of panic in the economy:

Panic is making a temporary resource shortage worse and is causing pumps to dry up.

The price should be able to fluctuate freely to direct these resources to where they are most needed. “Price gouging” laws are exactly the wrong thing to do.

The gas stations that are running out of gasoline did not raise their prices high enough. Why? The natural economy is now against the law.

Sorry fire trucks, ambulances, police, construction and public transportation. We ran out of gas because the prices were too low. What caused prices to remain lower than they would in a natural economy: the government.

Source: Et in Arcadia ego


Commentary

If everyone had proceeded as normal, or reduced their consumption of fuel, then there would have been very little interruption in the supply of fuel to our region.

Capitalists understand the Law of Supply and Demand:

Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.

Source: Law of Supply and Demand

What Governor Easley has instructed the Attorney General to do is immoral, and potentially more damaging to the economy than the idiots who flooded the gas stations Thursday, Friday and into Saturday.

**7.54 PM** Jon Ham also understands the problem.