Iowa flooding and price gouging

Michael Giberson

President Bill Clinton surveys flood damage in Davenport, Iowa, July 4, 1993.

President Bill Clinton surveys flood damage in Davenport, Iowa, July 4, 1993. (US GPO photo.)

Tornadoes and floods have led to official declarations of disasters for parts of at least four states (Oklahoma, Missouri, Iowa, and Texas).

All four states have laws against excessive price increases after emergencies, at least for the counties covered by the disaster declaration, and three of the Attorney Generals have issued a press release urging the public report price gouging to the state. (Oklahoma, Missouri, and Iowa; The Texas Attorney General was apparently content to merely alert residents in four counties to possible home repair scams and identity theft.)

In Iowa, the link between flooding and the price gouging law goes back twenty years; Iowa lawmakers passed the anti-price gouging law in 1993 after a massive flood in the state. A Chicago Tribune story from 1993 cited several examples of post-storm price increases: sand-bags, drinking water, sump pumps, and portable toilets.

Patrick Gibbs, the mayor of Davenport, says he got his first hint of the money to be made on floods when he came to work one morning to find “three people in my office, two selling sandbags and one pumps.”

He has watched the price of sandbags rise dramatically, from a quarter each when the first waters lapped around the downtown riverfront to 75 cents by the time three city blocks were underwater.

He senses a ripoff. “Sandbags are the kind of thing nobody buys unless they’re being flooded,” he said, rejecting arguments about shortages created by flooding.

Bob Brammer, a spokesman for the Iowa attorney general, says such price gouging has been relatively rare in the state despite the magnitude of the disaster.

Portable toilet price gouging gets mentioned in several Attorney General news releases. It may be the case that the Iowa law is the only one that specifically lists “sanitation supplies” among the good covered.

The same newspaper story mentioned, “soybean price futures have jumped 25 percent and corn futures 10 percent over the past month as crop losses have spread across Illinois, Iowa and Missouri. That means farmers outside the flood zone will get far more for their crops than normal….” The state didn’t have a price gouging law until later that year. But if the price increase happened this year, would farmers in the affected counties be in violation of state law?

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