Huck Loc: The Midwest

Is it Gouging, or Supply and Demand?

There is a very fine line technically between a business gouging the consumer and a fair price for the product based on the cost of production and a fair profit margin. I personally believe the margin that gasoline producers have been using at least since the OPEC fuel crises of 1973 has become a form of gouging and an unfair business practice that has actually become accepted by all consumers of gasoline. As the saying goes, “Gasoline prices rise like a rocket and come down like a feather.” If that’s the case then it would appear that the fuel industry is getting a little extra unintended margin (profit) at both ends. 1) They immediately are raising the price of gasoline at the pump that has been purchased and produced at a lower price – an immediate higher profit on that gasoline that was not originally intended. 2) When the crises ends and the price stabilizes there is a lag before the price is lowered at the pump – a period of extra margin gain (profit) on the down side. Now ask yourself is that gouging or just good business practices? It would appear to this uneducated consumer that it is a form of gouging because there is no doubt it could be controlled a little tighter to insure the consumer is receiving the fair market price previously determined.

Some years ago I had a deference of opinion concerning gouging with a then very prominent radio commentator who has long ago retired. He thought local merchants had a right to raise prices on portable generators the moment the crises began and demand increased and referred to it as a matter of supply and demand. I called it gouging, or personal greed, because it’s taking advantage of a crises beyond the control of the victims at a time when they needed their hard earned money the most. If those generators could have been purchased at anytime for the price advertised, but the price was doubled because everyone now needed one has to be considered gouging. On the other hand, had a merchant went out of his way and with great effort and additional expense on his part to acquire additional generators that were badly needed, would have had every right to raise the price to recover his additional expense and at the same percent of profit of the original generators would not be considered gouging. I suggested that the citizens of that area where the price was doubled should have treated this business as a pariah in the future.

It’s obvious that there will always be a fine line between gouging and supply and demand and the educated consumer alone will have to decide which.

What do you think?

Huck

Quakerwidow Loc: Chestertown, MD

I agree, but then I am a bleeding heart liberal who thinks the little guy deserves a break.

Boo_Boo Loc: Jellystone

Huck,

A catastrophic event should not raise prices of goods. The product was already manufactured and for the most part delivered. If you are talking about a store raising prices, then my opinion this is wrong.... if the product is on hand. However, there are times when the product has to be delivered to the store or the customer, if the shipper raises prices because of transportation costs, then I do not have a problem with the additional charges to be passed to the customer. In the end, I agree with you for the most part. And yes... gas companies are and have been price gouging for more years than I can remember....

crazylibertarian Loc: Florida by way of New York & Rhode Island

The additional income could enable him to go & get more.

Michael Rich Loc: Lapine Oregon

They're predatory nature in the fuel industry was brought to my attention when I was working in the oil field on a rig...my neighbor worked as a boss person at a refinery...this was during the gas shortage...the refinery was dumping refined fuel...by the tanker load...out in the desert because the the feds we're subsiding the how much they produced and there wasn't room in the market for all they were producing ... thousands and thousands of gallons....

robmull Loc: florida

Yea, QW "BHLib," and if they don't agree, send masked, black and brown shirted Nazi/fascist/anarchist/anti-American/anti-Trump "antifa" {OWS/BLM/ISIS, etc.}, to beat their heads in. GOOOOOOOOOOOOOOOOO PRESIDENT "45" TRUMP (R); JUST LIKE THE WEATHER!!!

maureenthannon

It's both supply&demand and gouging. Right from the start, POUS Obama said that furl prices would have to go up to reduce it's use. There have been known ways for a long time to give America enegy independent. The USA has more oil underground than anyone, including Saudi Arabia. Tapping into that oil has many pros and cons. They can be checked out at www.greenandgrowing.org/fracking-prosandcons/ There was also the Keystone pipeline, bringing us oil from Canada. Both fracking to get our own gas and oil, and Keystone XL would help make us energy independent, creat hundreds of thousand of jobs, and many other benefits to US. But the environmental groups don't think that we should have anything to do with gas and/or oil, they're afraid these things would harm their MotherEarth. There definitely are possible environmental concerns to consider. But they don't want us to even explore the possibilities. The Labor Unions, which supported Clinton, were disappointed that POUS Obama stoped the possibilities of adding hundreds od thousands of jobs; But the environmentalists contributed more to Obama's campaign that the unions did, so the money won out. Obviously it would make a lot of sense to let experts explore the possibilities, both for and against it. It would be a TERRIBLE MISTAKE to just go for it, but it seems that letting the government look into the possibile pros and cons, or to just shelve it without checking the facts.

lpnmajor Loc: Arkansas

Supply and demand? Where did that concept come from anyway? As you already pointed out, the cost to the consumer for a product or service, is based on the cost of production, transportation, taxes, warehousing/display and a reasonable profit. That means the "cost" is a fixed quantity and does not change after the fact. The supply and demand crap is an artificial method of increasing profits beyond the calculations already established.

How does something suddenly change it's inherent worth just because more people want/need it, or the supply of it cannot meet the numbers wanting/needing it? Luxury items, such as diamonds for example, have no inherent value, since it is not necessary for survival, so stockpiling diamonds, releasing them slowly to keep prices high, doesn't hurt anyone. If you've got enough money to waste on a piece of dirt, then you deserve to get taken that way.

What about those things that ARE necessary for survival, such as food? Let's say there's a natural disaster that wipes out 2/3 of the wheat crop, do the farmers that have wheat raise their prices based on "supply and demand"? No, they do not - their crop was sold before it ever came out of the ground. What WILL happen, is those who purchased the crop as a "futures" stock, will raise the price as much as they can get away with and pass on those inflated costs. The Consumer will pay dearly for a limited supply of bread. The farmer does not get one penny more. The "winners" are people who didn't break a sweat to bring a product to market. I consider them to be robber barons, folks our fictional super heroes usually go after............yet we applaud them for their brilliance.

Supply and demand is legal extortion....................and should NOT be legal, by any stretch of the imagination. Supply and demand is as foolish a notion as trickle down economics is.

boatbob2

Of course,Theyre price gouging,Last nite,Here in North Florida,I bought gas at $2.56 cents,last week gas was $2.29,Lets call it like it is,,PRICE GOUGING !!!!!

Michael Rich Loc: Lapine Oregon

Our fuel prices in central Oregon are always more than the national average... usually a dollar more than anywhere else... right now $3.38 per gallon...and rising..

Huck Loc: The Midwest

Huck Loc: The Midwest

Yes, I think I stipulated that under those conditions it would only be fair and not Gouging.

Randy131 Loc: Florida

There are many aspects of gouging in the oil energy business. Shortly after the 1973 oil shortages, where our oil companies made huge profits in the 20% to 30% areas, and a few even higher, the US government took them to court and was able to fine them tremendously for gouging, which reduced those huge profit margins back to what was normal, as the oil companies were also made to sell gasoline at a lost for a short period of time.

This put our oil companies in a quandry as how to raise their profits in the future, since the federal government was now keeping a close eye on their percentage of profit margin. But this was easily overcome by recognizing that the higher the cost of their resource to make their eventual product that they sell to the general public, the higher their profits will be, but still at the same percentage of profit margin, as such:

Oil that they are charged 35 dollars a barrel, which Congress passed a law to cap the cost of US produced oil, so not to allow gouging through charging as high as OPEC, at 10% would be $3.50 profit on every barrel of oil, but if they bought the oil from OPEC at a 100 dollars a barrel, at 10% would be $10.00 profit on every barrel of oil. So which barrel of oil would you prefer to use to produce your product that you would be selling to the general public, with no affect on your product or how much you would sell, since the American people were already hooked on this energy product and had to have it, no matter what the cost, as was proven in the 1973 contrived oil shortage.

After that, imported oil shot up from 20% of the oil used in the US every year, to 70% of the oil used in the US every year. But our oil companies knew Congress were not dummies and had to justify their buying of foreign oil over the usage of our own domestically produced oil, that was capped at 35 dollars a barrel. They did this by spreading the false rumor that oil is a finite resource, and the world was running out of it, as they shut down many hundreds of oil wells in the US, saying that they had been pumped dry.

But after finally getting Congress to remove the cap on what domestic oil could be sold for, and allowing exporting of our domestic oil once again, those same many hundreds of pumped dry wells have miracuosly been restored to where they are now pumping more oil today, than they ever had. The world has proven to have a glut of oil that will last for hundreds of years in the futre, and it is not because of new technology invented to retrieve it from the earth, even though they do have new methods to do so, but the world can't even use all the oil that is produced by the old methods of retrievement. Nothing was done to those reactivated wells in the US, that couldn't been done with the same technology they had when they shut them down, claiming that they were pumped dry.

When I have more time and space, I'll tell you what happened to the real gouging of oil produced energy after the hurricane Katrina, which Harvey has caused the exact same scenario today. I wonder if the federal government recognized how the oil companies hid their extremely high gouging prophets in plain sight from the Federal government back then, in order to prevent the same thing from happening today, which I have already seen it starting to happen again. Monopolies are not formed by just one company controlling all aspects of a product, but a oligopoly and oligopsony can do the exact same things, even more proficiently and efficiently than a monopoly.

crazylibertarian Loc: Florida by way of New York & Rhode Island

And who is going to make that decision? You & your sociaist buddies? Sorry but I'll take to free market with all of its difficulties, including price gouging. Your cure is far worse than the disease.

plainlogic

All in the eye of the beholder. Just as fairness, social justice etc.

Much like hearing aids. The electronics that it takes, doesn't justify 5 or 10 thousand dollar price. Especially when you see a lap top computer that takes thousand more components that an hearing aid. That goes to demand and profit.