Unpacking Cooper’s comment on price gouging

Right now, North Carolina’s getting only about one-third of the amount of gasoline we normally get. Shouldn’t we expect higher prices?

Attorney General Roy Cooper is urging consumers to snitch on gasoline retailers for raising prices — “price gouging” — during a temporary supply shock. He’s fielded over 1,100 complaints so far. He’s begun issuing subpoenas.

If you’re a retailer, are you pricing your stock according to a statewide 67 percent decrease in supply, or are you telling consumers to buy like nothing’s wrong?

Cooper:

A supply crunch shouldn’t be an excuse to rip off people who need gas.

Let’s unpack this comment.

Supply crunch: This is an acknowledgment of the problem and its temporary nature. Anyone with even a rudimentary understanding of economics should expect the price to rise.

Excuse to rip off people: This is highly presumptive. One hopes the attorney general doesn’t see himself as a mind-reader.

Furthermore, “rip off” is heated rhetoric with no objective basis. One consumer’s “rip off” is another consumer’s merciful end to a desperate search for scarce gasoline. One retailer’s price being set higher than competitors’ doesn’t force consumers to buy.

The attorney general causing all retailers’ prices to be set equal — not just to each other’s but close to last week’s, before the 67 percent decline in supply — basically forces retailers to run out of gas. Which means consumers are left unable to buy any gas.

People who need gas: One now hopes the attorney general doesn’t also see himself as a determiner of others’ needs. Not only is that extraordinarily presumptive, but it’s also a colossal failure on its own merits. You can’t buy the gas you need when there’s no gas left to buy.

The attorney general’s staredown of “price gouging” is causing gas station pumps to run dry within mere hours of receiving new fuel supplies. So if you have an actual need, it’s a pure crapshoot whether you’ll find that need filled.

If you want to know why gas prices need to be higher so the pumps don’t run out, read my comments yesterday. If you want a more in-depth analysis of the problem with anti-gouging laws and the role of prices that Cooper seems not to understand, read Michael Munger’s piece from 2007, “They Clapped: Can Price-Gouging Laws Prohibit Scarcity?

Jon Sanders / Research Editor and Senior Fellow, Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...