Russ Roberts on “price gouging”

In this commentary on NPR’s Morning Edition on Friday, Russell Roberts explains how oil companies cannot “gouge” us with high gas prices. You can also read a transcript of the commentary. Here’s the intro, to entice you to read the whole thing:

Whenever gas prices go up, we hear about the power of oil companies to gouge us. We’re stuck paying whatever they charge. After all, everyone needs gasoline. It seems big oil always raises prices whenever there’s a convenient excuse.

There’s only one problem with this theory of gouging. The facts don’t support it.

Once you account for inflation, the average price of gasoline today is about the same as it was in 1950.

How can this be? After fifty years of increased demand? And after fifty years of population growth! Yet those greedy oil companies squeeze less money out of us for a gallon of gasoline than they did in 1950. There have been long stretches of time where the price corrected for inflation fell steadily, year after year.