|The Future of Freedom Foundation|
Voice: Price-gouging tip line. How may I help you?
Mr. Jones: Id like to report price gouging.
Voice: Yes sir. Where is this price gouging occurring?
Jones: At the Exxon station on Route 286, right in my neighborhood.
Voice: What is the price being charged?
Jones: The price for a gallon of regular is $2.39.
Voice: $2.39? That doesnt sound very high to me. What has the price been lately?
Jones: Just a few days ago it was near $3.
Voice: I dont understand. You say the price has fallen about 60 cents in a few days, but you describe this as price gouging.
Jones: Thats right. I smell a conspiracy.
Voice: How can a dramatic fall in price be gouging?
Jones: I am being harmed, and I want action.
Voice: But how are you being harmed?
Jones: I own the gas station.
Voice: What are you talking about?
Jones: Last week my customers were willing to pay nearly $3 per gallon. Now they wont pay more than $2.39. They are forcing me to keep the price that low. If I try to raise it higher, they wont buy my gas. Theyll put me out of business. I have to make a living, you know.
Voice: Well, Im sorry about that. But if people dont want to pay more than $2.39 and someone is willing to sell them gas at that price, shouldnt they be free to buy the cheaper gas?
Jones: Double standard!
Voice: What do you mean?
Jones: When I was selling gas for $3 or more, some people thought I shouldnt be allowed to do that. I was just trying to make a living. The price I had to pay for gasoline went up, so even though the old gas was cheaper, it was going to cost me more to replace the gas I was selling.
Jones: Well, if people can complain to the government when I raise the price, why shouldnt I be able to complain to the government when my customers force me to accept a lower price?
Voice: But your customers havent forced you to lower your price. All they have done is say, in effect, that they will not buy from you if you sell above a certain price.
Jones: Then why cant I say to them that I wont sell gas if they wont pay above a certain price? Isnt it a two-way street?
Voice: But your customers have less power than you do. They are easily exploited by business owners like you. After all, they need gasoline.
Jones: What power do I have? If dont sell the gas, I starve. I only make a few cents profit per gallon. Why do you think I have this Merry Mart open round the clock with all that milk, candy, and bottled water, and those Jack Daniels baseball caps? Consumers are greedy and fickle. They want bargains and are never satisfied. If I charge a penny more than they like wham! they go somewhere else or they dont drive as much. Im up the creek. Do they give me notice? No. They just leave. The only way to get them back is to cut my prices. You dont think thats exploitation? Ill bet youve never run a business.
Voice: Well, no. I havent. But you have to understand that if we set a minimum price for gas, people would go bananas. Theyd probably vote out the mayor and the entire city council.
Jones: But you have no problem setting a maximum price, do you? Why is that? Because gasoline buyers outnumber gasoline sellers?
Voice: Thats democracy for you.
Jones: Maybe the government shouldnt set maximum or minimum prices for gasoline. Just let buyers and sellers do the best they can under the changing circumstances. That seems to work pretty well with other products.
Voice: That would never work.
Jones: Why not?
Where am I going to find another job?
Samuel Bostaph is head of the economics department at the University of Dallas and an academic advisor to The Future of Freedom Foundation
Anthony Gregory is a policy advisor at The Future of Freedom Foundation
James Bovard is author of The Bush Betrayal and serves as a policy advisor for The Future of Freedom Foundation
Benedict LaRosa is a historian and writer and serves as a policy advisor to The Future of Freedom Foundation
Bart Frazier is program director at The Future of Freedom Foundation.
Sheldon Richman is senior fellow at The Future of Freedom Foundation in Fairfax, Va., author of Tethered Citizens: Time to Repeal the Welfare State, and editor of The Freeman magazine.
Mr. Hornberger is founder and president of The Future of Freedom Foundation. Send him email.