Just filled up both my cars - wholesale gas prices going thru roof down south

Alabama Gov. Bob Riley and Georgia Gov. Sonny Perdue declared Friday a state of emergency for their respective states. That means price gouging laws are now in effect.


Alabama gas stations that hike prices unfairly will face fines of up to $1,000 per violation. If a business shows it has "willfully and continuously" violated the law, the station may be barred from doing business in Alabama.
Georgia violators will get hit with penalties between $2,000 and $25,000 per violation.


Ledger-Enquirer.com | 09/14/2008 | Gas stations risk hefty fine if caught spiking prices

 

To Rick: As for price gouging, If , as a Gas station owner I was selling gasoline at $3.25 a gallon, and a storm came thru and I knew that supplies were going to be disrupted. I would charge the same price as yesterday before the storm happened. That's called morality. Now should the oil companies have to charge a higher price because of the storm then thier new price dictates my raised price. All your other points were well taken, but irrelevant to the subject at hand. Gasoline is a product we all need, and I do not begrudge the oil companies profit and am Thankful for thier existence. We are all equally ENTITLED to the Earths resources. Some gasoline station owners are gouging. In some states it is against the law, and citizens can report it and the fine is HEFTY.

 

Hmm, why is it only during a "state of emergency" that these laws are in effect? Why should I as the consumer be allowed to be "gouged" if their is no "state of emergency"? Isn't the current state of housing in "a state of emergency"? Geez, if I was king for the day and these so called anti "gouging" laws you tout are so effective, I would permanently put into effect all anti "gouging" laws and schemes. Then we would all have everything we want and need at "fair" prices forever. No inflation ever. Utopia... Everyone would be rich! As stated before, another feel good, peasant mentality, "I'm using my supreme power as the governer of the state to help out the common folk" law...

As for the possible barring of doing business in the state of GA and hefty fines, nice incentive to do business in GA...

Another poster noted that some areas of GA are completely out of gas. This is due to two factors: consumer hoarding and perhaps mostly the shortage of the refined gas itself (hint, supply and demand point to follow...). Of course, for the gas station owner he will have to close his station. If he remains open he will face very few customers to purchase sodas and beer (which is where he makes most of his money) because his pumps are dry. And his building rent, insurance, and many other costs will continue to pile up no matter. He could have fared better if allowed to raise his prices during the temporary crisis allowing EVERYONE to purchase fuel, especially those who need it the most.



Rick
#4 2006

 

I find it absolutely absurd that you feel you (assuming you are of "able" body and mind) are ENTITLED to these products that someone else has produced. Or is it just refined petroleum and hotel rooms that you are entitled to have???

And herein lies the very crux/foundation of our argument. Everything you touch, see (sans the universe beyond the Earth), and eat is a product of the Earth. Man throughout the ages has toiled and brilliantly invented ways to extract and refine these resources in an economical way for consumption by the masses. From fuel, to houses, to autos, to TV's, to.... As an incentive (this is real important), one (as in individuals or corporations/stockholders) is/are rewarded through varying monetary gains depending on the perceived value (as determined by the consumer) of such a product.

The concept of entitlement is what many economists refer as a "poison" to the essential workings of a free market economy. Just as many poisons, anti "gouging" laws and entitlements can make you a little sick in small doses (as with the current only implemented in a "state of emergency" anti "gouging" laws) to a deadly dose if implemented on a grand permanent scale as with modern Venezuela and Zimbabwe (we've seen how Russia has been crippled by such policies over the past decades). These leaders were elected with landslide wins because they promised everything will be available at cheap prices forever. Of course, the party only lasts for a few years and then near and total collapse of the economy results. Businesses close and are nationalized. And we all know the rest of the story from here.

No, no one is going to die and collapse of our economy will not result from these small scale "emergency" anti "gouging" laws which mostly and arbitrarily target retail gas stations. But I do see these laws as the proverbial slippery slope. Soon, everyone and anyone who is in business may be target for "gouging". And they do create documented problems such as shortages we are currently seeing in many states.

Rick
#4 2006

 

Not to derail the ongoing political conversation, but here's a neat website that is relevant to the original posting:

USA National Gas Temperature Map

Canada National Gas Temperature Map

 

This is because the normal laws of supply and demand are disrupted by the emergency. Our free market system assumes that fair prices will happen automatically under normal conditions. Anti-monopoly and anti-trust laws exist to prevent abuse during normal market conditions. The question of whether we have a free market in this country is another issue.

Tom

 

I respectfully disagree. Unfettered supply and demand actually works best under stress. Any shortage, whether actual or perceived, is best handled by private enterprise, surely not the government. Laws which inhibit supply and demand encourage the public to not plan for emergencies and other scenarios which inhibit normal supply chains. But if all the hotel operators or all the fuel station operators met secretly beforehand in some "star room" to set prices, then, yes we would have a problem. But when they all act individually (as within one company or even down to one independent), well, that's a free market. Prosecution of Mr. Patel (thank you Sen. Biden) of the Quick Stop Gas and Go for charging a buck a gallon above yesterday's price makes for good headlines for both the governor and the AG. Never mind the guy probably came to the US with a $100 bucks to his name and works 18 hour days to successfully start a thriving mini mart in small town USA. He's an easy target with limited legal resources to fight such ridiculous anti "gouging" laws.

It's the hurricane or the natural disaster that's the one that needs to be prosecuted and fined, not the end retailer. As I constantly preach, if you don't like it, then start your own business, be the "moral hero" of the city, and charge below or at cost. We'll see how long your business model will last.

Agreed. But even those laws can be worded to inhibit the growth and innovation necessary to bring products, both in quality and quantity, to the hands of the consumer.

One could spend a lifetime studying this issue and not even scratch the surface. That's why we politicians to help us "ignorant" masses through the day;-).

Rick
#4 2006



Tom[/quote]

 

In times of emergency, public welfare and public safety override selfish commercial interests. That is why "normal" market forces need to be temporarily suspended in order to prevent further chaos.

It is analogous to imposing a curfew to discourage looting.

 

Have to agree with viking31 that the screams of "gouging" are counterproductive. In an emergency we want incentive for folks to bring supplies into the region that needs it, not disincentives. If there is no money to be made in carrying extra inventory for sale in times like these, then folks won't do it. That leads to shortage when supplies are most needed (basic economics.)

Contrary to zen's assertion, the suspension of normal market forces (gouging laws) can create greater emergency and chaos, not lessen it. I would have loved to have someone gouge me for gasoline when we were trying to evacuate from Houston during Rita, but nobody was selling gas anymore--several days before the storm. So we and many of our neighbors ended up riding it out in a declared surge evacuation zone (per Mayor Dufus.)

It is not analogous to imposing a curfew to discourage looting, as providing a legitimate product/service is not analogous to theft (looting).

A closer analogy is public official's response to Katrina's shelter problems. The "solution" was not to have any storm shelters in the evacuation zone until AFTER storms. This "brilliant" solution meant that those of us who couldn't get out during Rita because of inept transportation emergency planning by Texas (gridlock) had little choice other than riding it out at home. If an area takes a major hit with this sort of no shelter plan then there will be many more dead than if there had been shelters, but the public officials can claim it was not their fault...because the deaths were at home. Just what I want, a govt. looking to absolve itself rather than find real solutions.

 

Originally Posted by viking31
Hmm, why is it only during a "state of emergency" that these laws are in effect? Why should I as the consumer be allowed to be "gouged" if their is no "state of emergency"?...<snip>

Is that what it's all about? The magic "emergency" word? Why is it that it's soooo much easier to believe in 'conspiracy' or 'gouging' than simple supply & demand rules. (sure, there are gougers, but that doesn't look at the real issue ... which is the SUPPLY that ENABLES the possibility of gouging)

How hypocritical society is, to say "WE" are in an emergency, because of an earthquake, tidal wave, hurricane or whatever. The pathetic unrealized thing is, that we are ALL in an emergency. For example: a 75 foot tidal wave is 8 hours away, but you don't know about it. Doesn't matter. There's still an emergency.

It's called, the inextricably linked fossle fuel depletion & the Fed's legally printing paper money out of thin air, putting the trillions of debt onto the next generation, with no cheep energy to pay for it. This is the power of a compounding population ever using more and more fuel, food, resources etc ... all the while the fuel resources (and everything they create) are reaching a point where their ability to be extracted is compounding in an ever smaller way.

If you were near the top seats in the rose bowl, how long would it take you to drown, if a single drop of water near the bottom of the bowl were to double in quantity every minute?

Crash Course Chapter 4 | Chris Martenson

Too much to take in? Then perhaps the solution for YOU, really IS, simply "Waahhhh, I want a simple solution". Ok, your right, it just gouging. But if you're NOT simple, I hope you can take the time to listen to all 18 segments on this guy's web page(s). Because one really has to be 'simple' ... to forever focus on the 'emergency' right in front of them ... never realizing these are just tiny warning signs ... like when all the water in the bay runs out to sea. "Wahhh, my boat is stuck on dry ground" ... or, "oh my God, a tidal wave is coming!". You choose.

 

Prices broke the $4-a-gallon barrier in seven states, including some as far from the storm's path as Alaska and Hawaii. In some parts of the country, there were reports of gouging, with prices reaching $5 a gallon. A flood of complaints -- more than 549 since Thursday -- led Florida Attorney General Bill McCollum to issue subpoenas to four companies seeking documentation on what they paid for the gasoline they were selling to consumers.

...
However, only four of 17 oil refineries on the Texas coast from Corpus Christi to Beaumont remained closed, six were ramping up and the rest were operational, Kolevar said.



Operators of two major pipelines that serve the Eastern Seaboard, the Plantation and Colonial pipelines, said they were able to resume operations yesterday carrying diesel, heating oil, jet fuel and gasoline from the Gulf Coast at reduced rates.



washingtonpost.com

 

zen,

You've not ever been around one of these big plants have you? They've been down for several days and some are now starting up (six). These are among biggest refineries in the U.S. There are still after effects from Gustav at play as well. (Baton Rouge finally is getting more of its power back.)

The outage you just named is 10 of 17 along the coast with six of them starting up.

The pipelines to the East are running at reduced rates.

Plus, everybody just filled their tanks early. That's a recipe for regional shortages.

By the way, most likely time for a major event (unplanned lengthy shutdown) is on start up after something like this.

Refining capacity in the U.S. has been tight the last several years, and for good reason. They lost their a$$es for decades due to overcapacity so they don't want to overbuild again especially at a time when the consumer is actually starting to show signs of cutting back over the long term. Take away 10% of that capacity for a week or so and you have a problem.

But, hey, blame it on conspiracy theories or whatever works for you.

 

Shawn,

I grew up in Louisiana, have lived in Lafayette and Houston and traveled extensively through the coastal region between those two cities. I'm no stranger to the refineries along that coast. I have lots of relatives and friends in the area who are still out of power. No need to lesson me on the impact of hurricanes, I've lived through a couple big ones myself.

The point we're discussing is whether or not price gouging is normal and should be condoned. It is a moral issue at the least, and at certain times it may be within a state's right to step in to protect a distressed segment of the public from being taken advantage of by unscrupulous merchants, be they hoteliers or gas retailers or whatever.

I'm not at all suggesting there's a conspiracy, so please don't put words in my mouth, I'm sure you're too old for that kind of childish thinking. I am suggesting that if you were stranded on a highway trying to weather a storm, you probably wouldn't appreciate others charging you triple the normal price for a room simply because you had nowhere else to go and could possibly perish. That's just not very humane. And that's probably why anti-price gouging laws are in place in many states.

Now we can debate the definition of gouging and the merit of these laws if you like.

 

Zen,

"Gouging = death" is a straw-man argument. It doesn't do the hotelier any good to have high prices if the room is empty. Conversely, full rooms with more people left outside is true regardless of how much was charged.

In fact, unrestricted pricing encourages the hotelier to stuff three times as many people into each room and get people out of the storm.

Cost changes conduct. Do you really want people in a disaster consuming as they had before the disaster ?

 

zen,

Like I've said I would rather be "gouged" than have no options. From what I've seen "no options" is what your mindset leaves us with in a real world market. It makes more sense for the gas stations and hotels to close than deal with the problems. (That allows them and their employees to get out of the area for example and nobody can accuse them of gouging.)

And as it said at the top of the article, "wholesale prices" were spiking. So making gouging claims is rather foolish when the retailer is stuck paying more for the last bits of gas. Better to just shut off the pumps so there is no supply.

 

It would be worthwhile for anyone interested in this debate to check your state's anti-price gouging law to see how "gouging" is defined by your state legislators before making further assumptions. It's a law that affects you, and if you don't agree with it, write your state representative or governor to complain and have it removed from the books.

If you're a proponent of a totally "free market", then perhaps you should also be in favor of price fixing, collusion and other ancient capitalistic tricks.

In reality, a totally free market unfettered by regulations doesn't exist because we have learned that unbridled capitalism doesn't promote societal growth and well being in the long run (example: child labor). In the case of extreme emergencies such as natural disasters (or even man-made ones like 9/11), some intervention is probably required to prevent the patient from further shock and trauma.

 

Those refineries put into emergency flaring and shutdown (To quickly get rid of volatiles to reduce risk of explosion) are a minimum of 40 years old. Some modern control systems have been overlaid, but for the most part you're dealing with +40 year old designs, many still running 5-15 psi pneumatic control

Assuming the wind and water damage can be fixed sometime this week, and a "normal" startup sequence can be done, expect 2-3 weeks to go from cold start to "in spec"

In contrast, a brand new and modern refinery design, with modern digital control bus, such as the SECCO facility near Shanghai, can go from cold start to in-spec in ONE SHIFT

Whether our electric grid tie system, pipeline operations, air traffic control, refineries, or other "hard" infrastructure, we initially embraced the current state-of-the-art control systems, then refused to keep updated. You become so hopelessly obsolete it isn't even funny

A similar contrast is in defense. The American taxpayer pumped around $20 billion 1960 dollars into the IBM SAGE (Semi Automatic Ground Environment), a network of 20 early warning radar centers.

Around half a million vacuum tubes per site, needed 120 tons of chiller capacity to keep the tubes from melting. They even had a panic button, if the chiller quit, you had two minutes to shut down the entire system before it overheated and melted

The Air Force kept that clunky system running until the early 1980's, far beyond it's original projected lifespan and even far beyond any usefulness. It was a remarkable achievement for 1962, but it was obsolete by 1965

I'm hoping with Katrina, Gustav, and now Ike, the oil companies and politicians will understand the need to immediately upgrade the refineries and other hard infrastructure

 

I heard on the radio this morning a report about a woman with a son with some kind of condition that required him to be kept on a respirator. Since their house has no electricity, she had to run around to find a store that had a generator, then had to find a gas station to buy the gas to run the generator. We don't know how wealthy or poor the woman is, but it is conceivable that had the store jacked up the price for generators and she didn't have enough money to buy it, her son's life could be in real danger.

For that woman this ain't no strawman argument. It's a real life and death struggle, regardless what macroeconomic theories and well paid academics say.

 

I'm sorry, but your radio story is somewaht less convincing the the alternative story of the woman who went to buy fuel for her generator but could not find any because all her neighbors squandered the limited resource since it was cheap.

Sound familiar ?

 

I'm skeptical of the story since generators sell out first thing. And of course, folks aren't going to load up on generators to take there and sell for fear of being accused of gouging.