Archive for October, 2009

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Not helping out due to anti-price gouging laws

October 22, 2009

Michael Giberson

It looks like we may get through the 2009 hurricane season without any new evidence generated of the harm due to anti-price gouging legislation. The lack of a lot of hurricane damage is good, obviously (but I foresee that it may leave me bereft of new material for blogging on price gouging).

Wikipedia currently says, “So far this season ties for record low activity with 1982 for lowest number of hurricanes forming in a season.”  The two major hurricanes so far this year have had almost no effect on the oil and gas industry in the Gulf of Mexico and along the Gulf Coast, which means no supply disruptions, no price spikes, no declarations of emergencies, and no new price gouging complaints to be investigated by states.

Lacking new material, here is a quote from the Federal Trade Commission’s report on its investigation of price increases and price manipulation claims subsequent to Hurricanes Katrina and Rita in the late Summer of 2005:

Staff interviews with alleged price gouging retailers indicated that some of highest prices occurred when stations were running out of product, were uncertain about when they would be re-supplied or at what price, were trying to ration their dwindling inventory, or were trying to curtail panic buying. In addition, because unbranded stations saw their wholesale costs increase above those of branded stations, the retail prices of unbranded gasoline increased to high levels. One national retailer told staff that it closed its stations in Florida (which normally bought from a refiner at prices tied to a Platts spot market price) because the firm could not afford to re-supply the stations without either selling gasoline at a loss or risking that it would violate the state’s anti-gouging laws.

That last sentence indicates the harm created by anti-gouging laws. Gasoline consumers in the state would obviously be better off with more supply brought into the state rather than less, and with these stations offering gasoline at a high price rather than not offering gasoline at all.  The law impedes activities by gasoline retailers that would help gasoline consumers.

Apparently – despite the FTC’s extensive investigation, thorough analysis and detailed report, despite the logic and evidence presented by economists and others in other forums – many politicians, editorialists, and consumers continue to think anti-price gouging laws are good.

The interesting question: what evidence or argument could persuade open-minded proponents of anti-price gouging legislation to change their minds?

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A tree, a rock, a cloud, and policy toward devices that emit carbon dioxide

October 22, 2009

Michael Giberson

Just because someone is professionally qualified to discuss a tree, a rock, or a cloud does not make them expert on what makes good public policy toward trees, rocks, or clouds.  Need an example?  Here is a clip from an interview with climate scientist Ken Caldeira on Yale Environment 360.  Caldeira is currently blog-famous due to his inclusion in the controversial chapter 5 on climate change in Leavitt’s and Dubner’s Superfreakonomics“:

Yale Environment 360: I want to start with this little dust-up over SuperFreakonomics. In the book, you are quoted as saying, when it comes to global warming, “Carbon dioxide is not the right villain.” Is that accurate?

Ken Caldeira: That is not accurate. I don’t believe I said anything remotely like that because I believe that we should be outlawing the production of devices that emit carbon dioxide, and I don’t think we can solve this carbon climate problem unless we drastically reduce our carbon dioxide emissions very soon.

Hold on a minute, did he just say, “I believe that we should be outlawing the production of devices that emit carbon dioxide”?  Does he have any policy analysis behind this recommendation, or is it just a jump from “carbon dioxide emissions bad => ban them” without further analysis?

Bad policy advice, at least if we take the remark as presented. (After all, maybe he was misquoted! And, in any case, given the chance Caldeira might add some useful qualifications to his bald statement of lousy policy).

As an economist, I naturally feel qualified to research, study, think about, discuss and opine on just about any topic out there.  Similarly, as an economist, I will object to, resent, condemn, and oppose efforts by non-economists to discuss economics or closely related matters.  I went to graduate school, this is what I was taught. Environmental policy discussions provide many opportunities for me to indulge both impulses.  Climate science? Sure, I can comment on that!  A climate scientist spouting off on climate policy? I call foul.

On the other hand, in my professional opinion as an economist, the interview is pretty good on the topic of geo-engineering.

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Market designs for Tres Amigas: How about trilateral market coupling?

October 21, 2009

Michael Giberson

More thoughts on economic issues related to the Tres Amigas project, an ambitious proposal to connect the Western, Eastern, and Texas electric grids via a three-way high tech transmission link located in eastern New Mexico. (Earlier: Tres Amigas intro and Economics for …).

Europeans have had several years of experience connecting separate national power markets via transmission links, and years of experience with inefficient use of those links.  Problems in inefficient use arise in part due to the difficulty in coordinating power transactions with matching transmission transactions.  The current best solution to the problem has been to employ a concept of “market coupling.”

The APX Group, Belpex, and Powernext jointly operate a trilateral market coupling process for France, Belgium, and Netherlands.  APX explains the market coupling process on its website:

Market coupling is a mechanism used to integrate electricity markets in different physical areas while requiring minimal changes to the local arrangements. Market coupling replaces a two-step process: a daily explicit auction of transmission capacity followed by the day-ahead energy markets. Market coupling integrates transmission allocations and energy trading, removing many of the inefficiencies at the day-ahead stage.

Market coupling allows exchanges to remain separate legal entities with individual trading platforms, contracts and clearing; a single regional market is created by optimising the use of the already existing transmission capacity.

There’s more (including a 28-page Trilateral Market Coupling Algorithm Appendix for the interested reader), but in short the neighboring power exchanges share information about the bids and offers submitted to each during the day-ahead market and then adjust their individual clearing of bids and offers such that power flows from low-cost to high-cost areas and the price of power tends to be equalized among the areas.  The result is a much more efficient use of the interconnecting links, reduced price volatility, and a reduced cost of producing power over the three-region area.

For a deeper look at market coupling issues: Leonardo Meeus and co-authors have noted that pricing outcomes may not be unique in the market coupling process (i.e. an efficient set of power flows may be consistent with more than one set of possible prices).  In “Market coupling and the importance of price coordination between power exchanges,” Energy, 34:3 (March 2009), Meeus et al. explain market coupling, the possible pricing problem, and how to choose among multiple possible price solutions.

Want more? Searching “market coupling” at Google Scholar yields several hundred results.

I also wanted to look at Derek Bunn and Georg Zachmann, “Inefficient arbitrage in inter-regional electricity transmission,” Journal of Regulatory Economics, forthcoming.  The pre-print is available online for JRE subscribers, but my institution is not a subscriber so I don’t have access yet. Here is the abstract:

This paper analyzes the efficiency of an explicit ex ante auction for network access to facilitating trade between two separate, but linked, electricity wholesale markets. It is generally assumed that greater regional interconnection will mitigate the exercise of local market power by dominant generators, but we show analytically that when a dominant player has access to a more competitive neighboring market, and is also the lowest cost producer, the exercise of market power becomes attractive and can have negative consumer welfare implications. For an empirical analysis, we use a unique data set of daily company-level flow nominations on the Anglo-French Interconnector (IFA). …We are able to identify evident inefficiencies in the market behavior, for which several explanations, including market power, may contribute.

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External costs of energy production, auditing the Energy Star program, and more

October 20, 2009

Michael Giberson

NewsWatch:Energy puts together a pretty good list of energy links, today noting the National Research Council’s new “Hidden costs of energy: Unpriced consequences of energy production and use.” (Surprise: coal looks bad. But note that much of the harm arises from a small number of coal-fueled generators.  The rest of the coal-burners are not awful.)

Also, a Department of Energy audit of the the Energy Star program “has concluded … that it does not properly track whether manufacturers that give their appliances an Energy Star label have met the required specifications for energy efficiency.” From the New York Times.

NewsWatch:Energy also notes the flare-up at the Texas Energy and Environment blog over informal remarks by the Oncor CEO on the lack of value from restructuring electric power in the state. Later Oncor issued a formal statement by the CEO. The official story: “In the long-run, deregulation – even with the short-run challenges we had – is the best decision Texas could have made.”

Hey, I just noticed that they also linked to my post on the Economics of Tres Amigas. Wow, they really are good at finding the best stuff. :-)

More links at Chron Energy Newslinks 10.20.09.

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Roads and paths as common-pool resources, and the problem of governing them

October 19, 2009

Lynne Kiesling

Yesterday at Reason’s Hit & Run Tim Cavanaugh wrote about something that I’ve been thinking about for a long time: the institutions we use for governing the shared use of paths between cyclists and motorists on roads, and among cyclists, walkers, runners, rollerbladers, etc. on multi-use paths. Tim’s starting point was Christopher Beam’s article in Slate on the same topic. Beam frames the question as “How do we get bikers to obey traffic laws?”, and classifies cyclists into two categories: vehicularists and facilitators:

What to do? Today’s cycling activists generally split into two groups: “vehicularists” and “facilitators.” Proponents of “vehicular cycling” believe bikes should act as cars: occupy full lanes, stop at red lights, use a hand signal at least 100 feet ahead of a turn. That’s the best way to make cars—and policymakers—aware of bicycles and to respect them as equals on the road. When it comes to making roads safe for bikes, vehicularists tend to favor training, education (most cities offer bike safety classes), and enforcement. Cyclists should not grouse about moving violations, the vehicularists argue. It is a sign that they’re being treated as equals.

Facilitators, meanwhile, say we should change the laws and the environment to recognize the innate differences between bikes and cars. That means special facilities like bike lanes, bike paths (elevated trails separate from the road), and even Copenhagen-style traffic lights for bikes. It would also mean changing car-centric laws that don’t make sense for bikes, like the rule that says you need to come to a complete stop at a stop sign.

I agree with Tim that the best response is to be part vehicularist and part facilitator; I figure my split is about 80/20. When I am on my bike I am a vehicle. I think that when I am on my bike I am dangerous to pedestrians and they are dangerous to me because their behavior can be unpredictable, and thus I should be on the road and not on the sidewalk. On the road I ride single file with other cyclists (I generally don’t do group rides), I stop at red lights, I don’t weave in and out of traffic, and I use hand signals. I do not, though, stop at stop signs unless there are other vehicles approaching the intersection; as both Tim and Christopher note, keeping your inertia up is really important on the bike, and stopping at stop signs when there aren’t any other vehicles present is an unnecessary reduction in my inertia that does nothing to improve safety. In other words, I adhere to the Idaho stop law, under which Idaho cyclists are allowed by law to treat stop signs as yield signs in the absence of other vehicles. I am a “facilitator” to the extent that I believe we should amend existing traffic laws to enact the Idaho stop law more widely. In general, I behave the same way, and for the same practical and philosophical (i.e., anarchist) reasons as squarooticus voiced in his/her comment on Tim’s post:

Anyone who advocates that bikes (or all cars!) obey every traffic law has bought into the modern statist notion that laws are ends in themselves. The rest of us (especially the anarchists, who hate unnatural laws) understand that laws are a means to an end. In this case, that end is safety.

How many of you come to complete stops in a car when you get to an intersection in which you have 100% visibility in all directions and there is nothing coming? I certainly don’t, and I don’t know many people who do.

When I’m riding my bike, have perfect visibility, and am not in a position to surprise a driver, I will slow down at a stop sign or light, look in all directions, and proceed through if it is safe to so. I would actually be in favor of car drivers doing this as well, eliminating the need for most traffic control devices, if I felt that most car drivers were capable of doing so safely. Since half of them are yakking on a cellphone wedged between their shoulder and ear, smoking a cigarette with one hand, holding a coffee with the other, and driving with the left knee while the right foot actuates the velocitator and deceleratrix, it seems pretty clear that this isn’t the case.

SAFETY. That’s the point. Not blindly following rules for the sake of following rules. Follow the rules during situations in which predictability is integral to safety, but bend the rules when safety would not be an issue.

Similarly, when I am on the bike path in Lincoln Park I am constantly saying “on your left!” and making sure that the other users of the path are aware of my presence, since as a cyclist I am the fastest and most dangerous type of user on the path. But I avoid paths whenever possible, because the way I ride is more incompatible with paths than it is with roads.

I do find the hostility between motorists and cyclists disturbing, and the anger and attitude on both parts in the comments to Tim’s post show some examples of why it’s so disturbing. But it’s not as one-sided as Beam’s “how do we get cyclists to obey traffic laws?” headline suggests. Not surprisingly, I think of the cyclist’s dilemma on both roads and paths as a problem of common-pool resource governance similar to those that Elinor Ostrom and other new institutional economists study.

Let’s start with the path. This, for example, is my path, downtown near Ohio Street beach, although I spend most of my time on it up north, between Belmont and Foster, where I run. Note the ease of access and many multiple uses of the scarce common-pool resource (and if you look carefully you’ll see a swimmer there too!):

chicago_lakefront_path_dburden_large

Moreover, when the path is congested, these uses can conflict. In particular, rollerblading and cycling conflict the most, because a rollerblader’s leg stroke is wide and his/her speed can vary widely, while a cyclist takes up less width, but is moving quickly. The potential for a serious accident is high. The institutions used to govern our shared use of this resource are mostly informal and grounded in common sense — cyclists are expected to have a bell and/or say “on your left”, pedestrians are expected to look both ways and yield to cyclists and rollerbladers before crossing the path, and runners are expected to run on the gravel path where there is one (and runners who love their knees are going to benefit from doing that anyway!). Path users generally evolve patterns that serve as a compromise with the other users; for example, cyclists doing fast (>16m.p.h.) training rides know not to expect to do so after 10 AM on summer weekends, and rollerbladers learn that they should coast when they hear “on your left”. It’s not perfect, and things happen that inject noise into the system (such as having a toddler dart out unexpectedly from a beach onto the path, or a volleyball bouncing in front of you, or a cyclist or rollerblader with earphones in when they should not be), but in general, the informal institutions that have grown on top of the formal legal requirement that it be a multi-use path keep things both safe and civil.

The economic logic of governing the commons also applies to the road as a common-pool resource shared by motorists and cyclists. It’s really only when there is congestion of traffic among the two types of users that their use rights come into conflict, although in some situations congestion kicks in early — for example, some of the smaller “B” roads I’ve been on in England would hit congestion with one car and one bike and a curve in the road! The institutions used to govern the uses of the shared resource here are a mix of formal (traffic laws) and informal (courtesy).

More so on the road than on the path, the formal institutions and the informal institutions interact. Here’s an example of what I mean: cyclists weave in and out of traffic and generally ignore stop lights, which angers motorists and makes them more disinclined to treat cyclists with courtesy, which angers cyclists and makes them more disinclined to obey traffic laws or to treat motorists with courtesy, etc. etc. Or let’s start from the other side: some motorists don’t like having to share the road with cyclists, even those who ride safely and generally obey traffic laws, so they don’t treat cyclists with courtesy (drive too close to them, honk at them, etc.), which angers cyclists and makes them more disinclined to obey traffic laws or to treat motorists with courtesy, which reinforces the motorists’ preconceptions and angers them further, etc. etc.

My view of the road as a common-pool resource governed by a combination of formal and informal institutions is why I’m 80% vehicularist/20% facilitator. The stop sign law for cyclists is excessively costly without increasing safety for either cyclists or motorists, and its stringency induces cyclists to ignore that law, which erodes the respect for bike laws more generally. However, it’s also true that most motorists don’t understand the physics and the dynamics of cycling. That’s why my general recommendation about formal governance in this case is two-pronged:

  1. Implement the Idaho stop law.
  2. Require all drivers to undergo bicycle training and pass a cycling test in order to get a driver’s license.

Unfortunately, I don’t have a good answer for cyclists weaving through traffic or people in cars throwing things at cyclists other than more strict enforcement and penalties …

As for the issue of separate bike lanes, I’m not sure that the costs outweigh the benefits in all cases, so in the spirit of Ostrom’s polycentric and organic institutions, I would recommend continuing to evaluate them on a local basis. If the combination of amending the traffic laws and taking measures that will increase the likelihood of courtesy makes both cyclists and motorists happier and safer without the expense, that would be a good thing.

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Is it super freaky?

October 19, 2009

Michael Giberson

The sequel to the surprise-hit Freakonomics — I think the sequel is called Freako II: The Empire Strikes Back or something like that — is causing waves due to commentary on global warming in Chapter 5. I haven’t seen the book or read the leaked chapter 5, which is circulating online. I’m not a climate scientist, nor do I play one on my blog. I haven’t even read too many of the commentaries on Freako II, Ch. 5. Of the ones I have read, I find the energy with which some people have lept into battle against the chapter somewhat surprising. (Stephen Dubner responds to some of the critics at the Freakonomics blog.)

Brad DeLong has been prominent in jumping on the chapter, but he identifies his latest post as the last. In this last post he does the reader the favor of patiently combing through Chapter 5 and explaining fairly precisely what changes he would recommend. Many of his notes seem fairly thoughtful and constructive. Personally, I would have been unwilling to suggest that the U.S. could resort to military force as a way, ultimately, to coerce other nations to implement policies to combat global warming. (See DeLong’s notes for p. 173.) I would guess the hint of military invasion is intended mostly as a signal of how important the issue is to DeLong.

DeLong does follow Leavitt and Dubner into electric power issues somewhat closer to my area of competence. DeLong observes:

p. 187: Claim that “coal is so cheap that trying to generate electricity without it would be economic suicide” needs much, much more backing-up: I can’t see how it could possibly be true.

Well the meaning of “economic suicide” is lacking in sufficient content to be clearly true or false, but if we interpret the Superfreak sentence as claiming “suddenly giving up coal-fueled electric generation would cause a substantial negative shock to the economy sufficient to push the economy deep into a recession which would take several years to recover from,” I’d be inclined to agree. Slowly phasing coal-fueled generation out of the electric power mix here and elsewhere, say over a twenty year period, would not be “economic suicide.” But a ban on coal use, whether immediate or slowly phased in, probably isn’t the right industrial policy for our future. Really, just amongst us economists, can we agree not to demonize particular fuels and technologies and instead direct the force of public policy toward externalities?

While I’m not a climate scientist, I have thought some about the economic incentives facing pundits and reporters. In the meta-discussion surrounding the Freako II controversies, discussion of why pundits might trade-off factual observations for controversy. Mark Thoma’s thoughts, riffing of a post by Mark Liberman on Language Log, were interesting in this regard. Liberman says game theory explains why pundits always take the low road, suggesting a kind of Gresham’s Law theory where bad (but sensationalize) analysis drives out good.

Thoma offers some thoughtful exploration of the issue. He says, “It drives me crazy that, for example, people invited to appear on CNN will say something that is an outright lie, and the person saying it clearly knows it is a lie or misrepresentation, but yet they get invited back anyway due to their entertainment value.” Yeah, me too. Or rather it would drive me crazy if I watched CNN much. Can’t stomach too much cable news watching.

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Economics for Tres Amigas

October 17, 2009

Michael Giberson

Tres Amigas is a proposed project to link the Eastern Interconnection, Western Interconnection, and the Texas Interconnection (ERCOT) by means of a high-tech three-way superconducting AC-DC-AC connection. You might wonder what economics has to say about such an unprecedented and innovative proposal.

Consider this summary from Ralph Turvey, “Interconnector Economics,” Energy Policy, 34 (2006) 1457–1472:

Interconnectors yield undoubted benefits, but whether their likely level would justify their probable cost is in most cases subject to great uncertainty. Benefits from an existing interconnector could be maximised if a single system operator was responsible for both unit commitment and dispatch in the connected areas. But when there is no such single operator, securing optimal utilisation of an interconnector presents great difficulties, even with a single DC link, as the phenomenon of two-way nominations attests. The vastly more complex problem of achieving an approximation to optimal use of multiple AC links raises additional difficulties….

In the Tres Amigas case we can rule out the idea of “a single system operator responsible for both unit commitment and dispatch in the connected areas.”  Theoretically ideal.  Ain’t gonna happen.

Fortunately, it is possible to approach that ideal by implementation of concepts like “virtual regional dispatch.”  Turns out that VRD has been a tough sell even in cases like New York ISO and ISO New England where it seems to make a lot of sense.  At least the Tres Amigas proposal doesn’t rise to the level of a “vastly more complex problem of … multiple AC links.”  And besides, we don’t need to attain optimal in order to capture a worthwhile amount of gains from trade.

Here’s another related article, Laura Malaguzzi Valeri, “Welfare and competition effects of electricity interconnection between Ireland and Great Britain,” Energy Policy, 37 (2009), Pages 4679-4688. From the abstract:

… Social welfare increases with interconnection, although at a decreasing rate. As the amount of interconnection increases, there are also positive effects on competition in Ireland, the less competitive of the two markets. Finally, it is unlikely that private investors will pay for the optimal amount of interconnection since their returns are significantly smaller than the total social benefit of interconnection.

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Why have 31 states passed anti-price gouging laws (and 19 not)?

October 16, 2009

Michael Giberson

Cale Davis, in partial fulfillment of the requirements for the degree of Master of Science in Applied Economics at Montana State University, produced a thesis examining why some states do and others don’t have anti-price gouging laws. 

The abstract of “An Analysis of the Enactment of Anti-Price Gouging Laws“:

Anti-price gouging (APG) laws are state-level price controls only effective during times of emergency. From standard economic analysis, there are no apparent beneficiaries from price ceilings. Thus, the enactment of APG laws is puzzling from an economic perspective. The passage of APG laws is first analyzed with case studies of all thirty-one state laws. The case studies include information such as disasters that triggered the enactment of the laws, detail on enforcement and penalties, and information on supporters and opponents. This information is used to help determine why policymakers enact the laws. From the case studies, it is apparent that state officials devote significant resources to enforcing APG laws. Thus, it can be concluded that APG are not symbolic, toothless measures. A general lack of understanding of markets also appears to play a role in the laws’ enactments. Additionally, there are case studies of twelve states that do not currently have APG laws. In general, these states have either taken enforcement action without APG laws or considered an APG bill that ultimately failed. The enactment of the laws is also investigated with statistical models. The passage of APG laws is found to be associated with disaster variables like precipitation, hurricanes, and earthquakes. There is mixed evidence that poorer states are more likely to enact APG laws. More Democratic states are not more apt to adopt APG laws. Lastly, income dispersion and gas prices have no measurable effect on APG law passage.

The issue is understudied so this research makes a useful contribution to the economics literature. In fact, I don’t know of anything else quite like this research on price gouging policy.

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This year’s Berlin wall 20th anniversary

October 16, 2009

Lynne Kiesling

A couple of nights ago I was reading Matt Welch’s introduction to the November issue of Reason, in which Matt wonders why we have heard so little discussion of the defeat of communism on its 20th anniversary. This fall is the 20th anniversary of the fall of the Berlin wall on November 9, 1989, with rumblings and precursors starting as early as August in Hungary, near Lake Balaton, when Austria opened its border to those wanting to cross the Iron Curtain.

Twenty years later, the anniversary of that historic border crossing was noted in exactly four American newspapers, according to the Nexis database, and all four mentions were in reprints of a single syndicated column. August anniversaries receiving more media play in the U.S. included the 400th anniversary of Galileo building his telescope, the 150th anniversary of the first oil well, and the 25th anniversary of Teenage Mutant Ninja Turtles. A Google News search of “anniversary” and “freedom” on August 23, 2009, turned up scores of Woodstock references before the first mention of Hungary. …

In 1988, according to the global liberty watchdog Freedom House, just 36 percent of the world’s 167 independent countries were “free,” 23 percent were “partly free,” and 41 percent were “not free.” By 2008, not only were there 26 additional countries (including such new “free” entities as Croatia, Estonia, Latvia, Lithuania, Serbia, Slovakia, and Slovenia), but the ratios had reversed: 46 percent were “free,” 32 percent were “partly free,” and just 22 percent were “not free.” There were only 69 electoral democracies in 1989; by 2008 their ranks had swelled to 119.

As November 9 approaches, I was happy this morning to find Timothy Garton Ash’s article in the New York Review of Books, reviewing nine (!) books analyzing and exploring various aspects of the momentous events in 1989. Ash’s thoughtful review includes insightful comments on hindsight bias in history, and the extent to which the events of 1989 were “multiple interactions not merely of a single society and party-state, but of many societies and states, in a series of interconnected three-dimensional chess games.” I particularly appreciated his remark on the faulty expectations of the superpowers:

It is perhaps a characteristic of superpowers that they think they make history. Big events must surely be made by big powers. Yet in the nine months that gave birth to a new world, from February to November 1989, the United States and the Soviet Union were largely passive midwives. They made history by what they did not do. And both giants stood back partly because they underestimated the significance of things being done by little people in little countries.

So I hope that these works, and Ash’s review, make Matt a little more sanguine, as well as reminding us all of the perils of centralized political power in all of its forms and the value that is unleashed when that centralized power crumbles.

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Florida price gouging laws: too vague or just flexible?

October 16, 2009

Michael Giberson

ExxonMobil, among the companies under investigation by the Florida Department of Agriculture and Consumers Services for price gouging following Hurricane Ike, has asked the state agency to explain just what price gouging is according to Florida law.

[ExxonMobil] officials claim the state’s rules for price gouging are too broad.

They have written to the Department of Agriculture asking for a definition of what’s considered price going during a state of emergency. They say if they don’t get a clarification, ExxonMobil may be forced to stop doing business in Florida.

State agriculture officials say the statute is written to provide some flexibility so that the agency can determine what is price gouging on a case-by-case basis.

The Florida Agriculture Commissioner, Charles Bronson, said the law doesn’t need to be clarified:

“We happen to think they’re very clear. We’ve ruled on them a number of times with a number of different businesses and we believe that we’re just going to go ahead the way we’ve been and that the law is the law, it’s pretty well spelled out. They should not have increased the price of fuel during that time and just as we’ve done with other businesses we’re gonna fine them.”

At issue are the meaning of phrases like “unconscionable price” and “gross disparity.”

The Miami Herald, reporting the same story, adds:

For the past year, Bronson’s agency has been investigating whether ExxonMobil overcharged suppliers in the days and weeks after Hurricane Ike struck the state in September 2008. The company has not been charged with any violations and notes that it has never been found to have violated price gouging laws.

Also see a Palm Beach Post story.

(In addition to prosecuting gasoline retailers and wholesalers who have charged unconscionably high prices, at least in the eyes of the Florida state government, the Department of Agriculture and Consumer Services is also responsible for prosecuting gasoline vendors who charge unduly low prices.  See this story from 2002 in which the state sued Amerada Hess for selling gasoline ‘below cost’ after a competing retailer complained.)

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