Price Gouging: One Way to Avoid the Law’s Reach is to Always Charge High Prices

Michael Giberson

The headline of this Q & A exchange in the Orlando Sentinel gets it right: “It’s only price gouging if you do it occasionally.”

Under Florida’s price gouging law, “it is unlawful to sell essential commodities, which include food, ice, lumber and gasoline, for an amount that ‘grossly exceeds’ the average price for that commodity during the 30 days before the declaration of the state of emergency.”

The gas station discussed in the article sits just outside the Orlando Airport, a convenient place to refuel your rental car, but not cheap. Come hurricane or high water, the price reportedly has stayed at $5.49 a gallon.*

Notice the implication – say a station a mile down the road was selling at a typical $3.55 price during the days before Hurricane Ike and then raised its price to, say, $4.49 after the hurricane hit Gulf Coast refineries. The cheaper station could be found in violation of the price gouging law, despite the presence of the more expensive competition.

By the way, I’m intending to point out a potential absurdity in the way price gouging laws work, not trying to suggest that the state government become even more involved in fixing prices.

NOTE: The average Orlando price only increased about $0.25 after Hurricane Ike according to www.orlandogasprices.com. The price at the station in question has dropped to $4.99 a gallon. Other stations just a little further from the airport are asking prices from $2.59 to $2.75 a gallon.

3 thoughts on “Price Gouging: One Way to Avoid the Law’s Reach is to Always Charge High Prices”

Ed Reid
October 28, 2008 at 2:02 pm

Mike,

Of course, there is always the alternative of letting the rental car company refuel the vehicle, for ~$8 per gallon.
Mike
October 28, 2008 at 4:00 pm

Ed, is that the good news or the bad news?

I guess since it provides one more option to the consumer, it must be good. Still, I’m surprised at how large the margin is between the SunCoast station and its nearby competitors. The unique location apparently supports the premium they charge (even so, they apparently have dropped prices along with everyone else, so they do face some competition).
Kevin Brancato
October 28, 2008 at 4:31 pm

I just read an excellent example of price gouging — in this article on term-paper mills:

Finals week is a gold mine. More than once the phone rang at midnight and the broker had an assignment. Six pages by 6 a.m. — the kid needs three hours to rewrite and hand in the paper by 9 or he won’t graduate. “Cool,” I’d say. “A hundred bucks a page.” I’d get it, too, and when I didn’t get it, I slept well anyway. Even DUMB CLIENTS could figure out that they’d be better off spending $600 on the model paper instead of $2,500 to repeat a course.

So I guess it’s also not price gouging when the buyer has far more to gain than the seller!

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