A somewhat flawed argument

By preventing gas stations from raising prices commensurate with demand, anti-gouging laws ensure only that a random, lucky few are able to top off their tank in times of shortage, argues Russell Vaughan of Cumming, Ga. And by preventing a free-market exchange of product and currency, we risk allowing the lucky to further deplete a commodity already in short supply. Mr. Vaughan expressed his views in a letter to the editor of his area newspaper.

Since the hurricane of Sept. 13 struck the Texas Gulf Coast metro Atlanta, where Vaughan lives, has experienced somewhat of a gas panic. Refineries on the coast temporarily shut down and pipeline flow slowed. Gas, when it is available, has been priced as much as 50 cents higher than before the hurricane in some areas. More than a week after the storm, short lines still form.

At least one area petroleum supplier has called for the state’s flagship university to call off the football games against a rival school to keep fans from stretching existing supplies due to their length of travel. That was a silly idea.

Mr. Vaughan apparently thinks it’s silly for the government to interfere in the trade of goods and services by policing retailers whose urge is to increase price on the slip in supply. The writer tells the editor that “Had gas prices been allowed to climb naturally during this shortage, drivers with less need would have been discouraged from consuming from the limited supply, leaving those with greater need – those willing to pay – with more gas available for purchase.”

Let us dissect Mr. Vaughan’s assertions: The first point raised is that gas priced higher than normal discourages drivers from purchasing more. No problems there. Such a scenario has played out in the United States for the better part of a year as gasoline has hovered around $4 a gallon in many areas and drivers – especially those who commute into cities from their suburban homes for work – either seek transportation alternatives or forgo their trips altogether.

Mr. Vaughan’s second point, however, is a bit hard to swallow. One’s willingness to pay for something – whether it be a gallon of gas, a home or a cheeseburger – is by no means evidence of one’s need for it. Likewise, willingness to pay has no relation to one’s means.

We are sire many a vagrant would willingly pay for a room in which to sleep for the night. It is the means they lack. And no one would argue their need for shelter. Many homeowners have been willing to pay for much more home than they can afford. That dangerous willingness is what has the financial markets in turmoil. Those homeowners, however, do not need homes the size of which they bought. Perhaps they don’t need homes of their own at all. It was because they were willing, not because they needed. And their willingness was greater than their means. 

It’s a misconception – that one’s need is demonstrated by one’s willingness to pay. Because one is willing does not mean that one needs. And because one needs, does not mean they have the means. What of the drivers living and working on the margins, commuting from the affordably-priced suburbs everyday, wasting fuel stuck in traffic to keep a job that barely pays the rent but is the only one they can get in this economy? What of that driver who relies on that vehicle’s ability to get them to and from a job that makes it possible to put food on the table for their children and themselves?

Would one argue that this driver of lesser means has less need than that driver of the sport utility vehicle who lives so near public transport they could abandon their wheels for days at a time but chooses not to?

It is the driver of lesser means that anti-price-gouging laws are in place to protect. And their need is no less dire than that of those of greater means.