Michael Giberson
What does “price gouging” mean? Commonly it is taken to refer to merchants raising prices substantially on necessities during emergencies. Each of the three elements – substantial price increase, necessary items, emergency periods – is part of a proto-typical case of price gouging. However, the term is frequently also used in cases lacking some part of these three elements.
For example, Hugo Chavez told merchants not to raise prices after Venezuela devalued its currency, urged consumers to report “price gouging”*, and has now forced over 600 shops to close because of post-devaluation price increases. (Link to news story; *I didn’t check the Spanish language sources, this is the term that has been used in English newspaper accounts.)
Venezuela has temporarily shuttered 619 retail stores for price-gouging in the wake of the devaluation of the country’s currency last week, official news agency ABN says.
[…] The Venezuelan leader had warned on Sunday that any price speculation by shopkeepers would trigger business seizures, and called on the National Guard to help people fight price hikes.
“To those gentlemen, let’s call them looters of the people… if they want to, go ahead and do it, but we’ll take their business and hand them over to the workers,” Chavez said on his weekly radio and TV talk show Alo Presidente.
The announcement sent crowds of shoppers to the stores to buy what they could at the old prices.
General price adjustments in response to changes in currency value do not resemble the proto-typical case of price gouging, but the term is tossed around anyway.
In Alaska, state politicians have been concerned by gasoline prices that have been among the nation’s highest. The term “price gouging” is employed, though no emergency exists. It is just the case, apparently, that over time wholesale gasoline prices became higher relative to prices in the rest of the United States. An anti-price gouging bill sponsored by state legislators proposes to prohibit “excessive or exorbitant prices for heating oil, diesel, and automobile and aircraft fuel” without any restriction to emergency or post-emergency periods.
Several Democratic legislators on Tuesday applauded Gov. Sean Parnell’s attempts to hold down fuel costs for Alaskans, but urged the governor to go further, and join their efforts to end fuel price gouging in Alaska. The governor wants to extend the eight cent fuel tax suspension, but the Democrats’ proposal could reduce gasoline costs by as much as 54 cents per gallon.
“Alaskans are paying too much for gas,” said Rep. Pete Petersen (D-Anchorage) who is a sponsor of HB 68 which would prohibit refineries from charging excessive or exorbitant prices. “The real problem is that Alaska’s two major refineries have no competitors and can charge whatever they want.”
(Another news story reporting “price gouging” allegations. Link to state legislator’s press release alleging $189 million consumer cost due to price gouging.)
Usually, when anti-price gouging sentiment is formed into anti-price gouging law, each of the three elements of the description gets some attention in the law. (Though, as noted here before, the resulting laws are not always as clear as businesses would like.) The Alaskan legislators claim a general state government interest in preventing excessive prices not limited to emergencies because “Alaska has a unique Constitutional responsibility to ensure that natural resources are used to the maximum benefit of the Alaskan people.”
I’m no expert on the Alaskan state constitution, but either this logic is faulty or the state has a whole lot more anti-price gouging work to do.