There are a lot of people claiming that price gouging should be criminal. What they fail to take into consideration is that price gouging is the only way to really allocate resources. The critics will claim that this is people taking advantage of others. However, gasoline prices were fixed and what happened was that everyone ran out and filled their cars just to have it and really did not use it. Those who wanted to leave couldn’t because there was no gasoline. I myself could not buy gasoline. I had a quarter tank and it was enough to get me to the airport only. So many others could not leave and many who tried ran out of gas and were stranded.
Had gasoline prices been allowed to rise, then those who were just hoarding gasoline would have thought twice if they were not going to use it. The same was true with water. When I went to the store last Monday, people were buying everything. There were people with two carts filled with water.
The view that price gouging will deprive some who cannot afford it fail to actually leave the theories behind and go into the real world during one of these things to watch how people truly behave. Price gouging will prevent people from hoarding which then deprives others at any price.
