Price Gouging

Price gouging is a critical event necessary to relieve shortages during a disaster, so the government outlaws it, and the media condemns it. Rabbi Daniel Lapin teaches in his book Thou Shalt Prosper one facet in Jewish culture that supports business acumen is the tendency to reject the snapshot in favor of the video. A snapshot is often misleading, a video shows what happened before and after.

A snapshot shows a line at a gas station and the price on the board something like $25/gallon. We are duly outraged.


A video shows gas distributors from Amarillo to Memphis to Atlanta directing their trucks with $2 a gallon loads to New Orleans, where gas is fetching five or ten times that. Soon new Orleans is awash in gas, and the prices come tumbling down.

Those highest prices quoted, according to studies, average about 15 minutes on the boards, before others begin to undercut it. Ten or twelve hours later that extra supplies come rolling in. Spot prices begin dropping fast. Problem solved.

The "gougers," after paying overhead for 24 hour operation (and security) usually end up with nothing else. Who benefits? As usual, in a free market, the consumers.

Rationing does not work since the gas fails to end up in the hands of who needs it most, and it fails to draw in more supply.

In USA we are not free to contract. We are not free to alleviate shortage in a disaster. It is against the law.

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