N.J. charges 8 merchants with gouging after Sandy


#1

New Jersey has filed lawsuits against eight businesses for allegedly gouging customers with exorbitant prices in the days after Superstorm Sandy roared ashore, the state’s attorney general said Friday.

The defendants, seven gas stations and a hotel, are accused of hiking their prices from 11 to 59 percent in the days after the storm. One gas station was charging as much as $5.50 a gallon, Attorney General Jeffrey S. Chiesa said. The hotel, a Howard Johnson Express in Parsippany, N.J., allegedly raised its room rates to $119 after the storm, up 32 percent from the top rate of $90 just prior to the storm

N.J. charges 8 merchants with gouging after Sandy  - Business on NBCNews.com

There are always people who will take advantage of a situation to gouge people. This happened after 911 with gas stations in other parts of the country besides New York


#2

The results of a stupid law. A law the result of a fundamental misunderstanding of capitalism.

We have now the spectacle of a Mayor Bloomburg sorting through food supplies to determine which meet his health standards in supply of emergency relief to the community. The gouging laws are nothing more than a manifestation of the same underpinning philosophy; government knows best the needs of people.

The only effective way of distributing gasoline and hotel rooms to those most in need of them is by pricing. There is no government mechanism for doing so, other than allotting it all equally, the socialist approach, ensuring that the most needy needs go unmet, while the frivolous needs are granted equal status.

A friend of mine asked me if power should be restored first to those willing to pay more and I answered him in the affirmative. We restore power to hospitals first, for obvious reasons, without considering that hospitals would get their power restored first under capitalism in any event, based upon not only their ability to pay, but their ability to borrow to pay. If one expects to get paid a premium for services rendered, one prefers a client with both proven financial resources or the ability to produce financial resources in the future. What business has more profit-making potential than a hospital? Any other interest, in particular a business interest, has to compete with that hospital for restored electrical power, and the only reason they end up in line, under a purely capitalist basis, is that they see it in their economic interest to pay a premium for power restoration.

If I’m stuck on the side of the road with no gas in my tank, and somewhere extremely important to elsewhere be, I willingly pay ten dollars for a gallon of gasoline to get me rolling. Was I gouged? Hell, no! I paid what was needed to accomplish my more important objectives.

What would compel me to load a tanker truck full of gasoline and drive it to New Jersey, versus just selling it at current Midwestern rates, other than an increased profit motive? If I carry a truck load of generators to Staten Island, where I sell them at double the normal price, have I done more for Staten Islanders, who willingly pay my price, than had I never left home?

If I have a foot of water in my basement, and a hysterical wife who insists that creates an unlivable condition, I may arrive with her at the hotel, where my competition for a room is someone whose whole house has collapsed. What other mechanism, other than price, is to determine who gets the room? If I’m without shelter of any sort, $200 per night sounds like a deal, whereas my hysterical wife with the mildly flooded basement has cause to reconsider her hysteria. And what would compel that hotel to go out and acquire extra beds to cram into rooms were it not the potential for increased income?

The same is true for gasoline. In a crisis, I may decide to go out and top off my tank, just to be on the safe side. Arriving at the gas station, I see gas priced at $10/gallon. I decide I’ve enough to get by, thereby freeing up the line for gasoline for those who truly cannot do without it.

What happens when government purports to regulate and allocate these resources is that everyone eventually, for government takes a long time to make decisions, gets treated the same. Equally shabbily, in most cases. Hours and days before government got going in the decision-making process, entrepreneurs were already rolling based upon nothing more than profit potential. Absent that, they sit home watching the football game.

The same thing happened during Katrina. Truckloads of generators were seized, their owners jailed, for being brought to the stricken region and the attempt made to sell them at a price their buyers would willingly pay. Generators became more valuable almost overnight. Gasoline became more valuable nationwide because the Gulf drilling rigs and refineries shut down. Were the oil companies gouging, or was it a simple example of supply and demand? Plywood didn’t get shipped to Florida because Florida government decided it knew the price of plywood better than the purchasers of plywood did. In the aftermath, Florida decided that insurance companies doing business in Florida would not be able to make such a fine distinction between wind and flood damage. Insurance companies decided they didn’t need to be in the Florida market. With fewer insurance companies in the market, what do you suppose happened to home insurance rates overall in Florida? They surely didn’t go down, and people at no risk suddenly assumed a greater financial burden for those most at risk.

Lost also, in the hysteria, is that businesses which charge a premium in such shortages have to deal with another market force; the satisfying of current customer needs with that prospect of retaining customers for future business dealings. We’ve all bought a product, usually out of necessity, that we vow never to purchase from that particular seller ever again. Anyone whose paid a dollar more per gallon for gasoline in NYC, because they forgot to fill up in New Jersey or on Long Island, vows never to get caught that way again. Gas stations and hotels are not particularly movable businesses. A gas station owner may make the determination that it is in his best interests to sell out his gasoline, with no resupply in sight, for no other reason than future animosity effecting his future business. Or he may decide to raise the price and rely upon buyer’s short memories. And rely upon the fact that not all of his potential customers need gasoline equally critically. Customers, left to their own impulses, will demand gasoline while denying it to the ambulance or fire truck in line behind them, or more commonly, to the person in line behind them who has relatively no options compared to their own.

And we’re to rely upon politicians to determine distribution of limited resources? Don’t we have enough evidence of how that always works out?

"The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics." Thomas Sowell


#3

[quote=“Sway, post:2, topic:37060”]
The results of a stupid law. A law the result of a fundamental misunderstanding of capitalism.

We have now the spectacle of a Mayor Bloomburg sorting through food supplies to determine which meet his health standards in supply of emergency relief to the community. The gouging laws are nothing more than a manifestation of the same underpinning philosophy; government knows best the needs of people.

The only effective way of distributing gasoline and hotel rooms to those most in need of them is by pricing. There is no government mechanism for doing so, other than allotting it all equally, the socialist approach, ensuring that the most needy needs go unmet, while the frivolous needs are granted equal status.

A friend of mine asked me if power should be restored first to those willing to pay more and I answered him in the affirmative. We restore power to hospitals first, for obvious reasons, without considering that hospitals would get their power restored first under capitalism in any event, based upon not only their ability to pay, but their ability to borrow to pay. If one expects to get paid a premium for services rendered, one prefers a client with both proven financial resources or the ability to produce financial resources in the future. What business has more profit-making potential than a hospital? Any other interest, in particular a business interest, has to compete with that hospital for restored electrical power, and the only reason they end up in line, under a purely capitalist basis, is that they see it in their economic interest to pay a premium for power restoration.

If I’m stuck on the side of the road with no gas in my tank, and somewhere extremely important to elsewhere be, I willingly pay ten dollars for a gallon of gasoline to get me rolling. Was I gouged? Hell, no! I paid what was needed to accomplish my more important objectives.

What would compel me to load a tanker truck full of gasoline and drive it to New Jersey, versus just selling it at current Midwestern rates, other than an increased profit motive? If I carry a truck load of generators to Staten Island, where I sell them at double the normal price, have I done more for Staten Islanders, who willingly pay my price, than had I never left home?

If I have a foot of water in my basement, and a hysterical wife who insists that creates an unlivable condition, I may arrive with her at the hotel, where my competition for a room is someone whose whole house has collapsed. What other mechanism, other than price, is to determine who gets the room? If I’m without shelter of any sort, $200 per night sounds like a deal, whereas my hysterical wife with the mildly flooded basement has cause to reconsider her hysteria. And what would compel that hotel to go out and acquire extra beds to cram into rooms were it not the potential for increased income?

The same is true for gasoline. In a crisis, I may decide to go out and top off my tank, just to be on the safe side. Arriving at the gas station, I see gas priced at $10/gallon. I decide I’ve enough to get by, thereby freeing up the line for gasoline for those who truly cannot do without it.

What happens when government purports to regulate and allocate these resources is that everyone eventually, for government takes a long time to make decisions, gets treated the same. Equally shabbily, in most cases. Hours and days before government got going in the decision-making process, entrepreneurs were already rolling based upon nothing more than profit potential. Absent that, they sit home watching the football game.

The same thing happened during Katrina. Truckloads of generators were seized, their owners jailed, for being brought to the stricken region and the attempt made to sell them at a price their buyers would willingly pay. Generators became more valuable almost overnight. Gasoline became more valuable nationwide because the Gulf drilling rigs and refineries shut down. Were the oil companies gouging, or was it a simple example of supply and demand? Plywood didn’t get shipped to Florida because Florida government decided it knew the price of plywood better than the purchasers of plywood did. In the aftermath, Florida decided that insurance companies doing business in Florida would not be able to make such a fine distinction between wind and flood damage. Insurance companies decided they didn’t need to be in the Florida market. With fewer insurance companies in the market, what do you suppose happened to home insurance rates overall in Florida? They surely didn’t go down, and people at no risk suddenly assumed a greater financial burden for those most at risk.

Lost also, in the hysteria, is that businesses which charge a premium in such shortages have to deal with another market force; the satisfying of current customer needs with that prospect of retaining customers for future business dealings. We’ve all bought a product, usually out of necessity, that we vow never to purchase from that particular seller ever again. Anyone whose paid a dollar more per gallon for gasoline in NYC, because they forgot to fill up in New Jersey or on Long Island, vows never to get caught that way again. Gas stations and hotels are not particularly movable businesses. A gas station owner may make the determination that it is in his best interests to sell out his gasoline, with no resupply in sight, for no other reason than future animosity effecting his future business. Or he may decide to raise the price and rely upon buyer’s short memories. And rely upon the fact that not all of his potential customers need gasoline equally critically. Customers, left to their own impulses, will demand gasoline while denying it to the ambulance or fire truck in line behind them, or more commonly, to the person in line behind them who has relatively no options compared to their own.

And we’re to rely upon politicians to determine distribution of limited resources? Don’t we have enough evidence of how that always works out?

"The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics." Thomas Sowell
[/quote]So it is okay to gouge but when those who used to frequent your store what then? After they tell their friends that you decided to take advantage of people in a dire time how many customers do you think they will have. There a consequences to actions. I was looking for something the other day and even though the fellow did not have it he directed me to where I might find it and he said that he believe in good relations.

My philosophy was the same when I was in retail.


#4

We quit shopping at a certain person’s shops in the area when we found out he was gouging on generators during an extended power outage in late '92.


#5

[quote=“Susanna, post:4, topic:37060”]
We quit shopping at a certain person’s shops in the area when we found out he was gouging on generators during an extended power outage in late '92.
[/quote]Bingo


#6

You might re-read the last paragraph of my above post. Otherwise, I see nothing here that validates the idea that the state should determine what is, or is not, gouging…or even have anything to do with the setting of prices.


#7

There are consequences to all our actions. If you price gouge during a disaster you risk affecting your reputation once it’s over. That doesn’t mean the state should be involved, though.


#8

[quote=“Jebby, post:7, topic:37060”]
There are consequences to all our actions. If you price gouge during a disaster you risk affecting your reputation once it’s over. That doesn’t mean the state should be involved, though.
[/quote]Ah to live in fantasy land.

If someone charges exorbitant prices during ordinary times and people still buy there that is one thing but in times of emergencies when people’s resources are limited or even gone to charge such prices could mean life or death but I digress since some think that is okay since it has not happened to them.

There are laws which cover consumer protection. Would you get rid of them as well?-- no need to answer I know you have no clue in fantasy land


#9

“Consumer protection” laws should be limited to fraud and negligence which can cause harm. Determining what you can charge for your product isn’t a correct function of government.


#10

There are fewer capitalists among us than what might be imagined. Oh, they claim they are, but the minute they experience the least doubt in the market’s ability to allocate resources, they insist upon a nanny state to protect their interests and calm their fears. Socialize the profit, privatize the loss; heck, they’re worse than Democrats.


#11

This not supposed to be the issue here. I lived through this mess and those who say that the price gougers shouldn’t be prosecuted are morons who are only protecting losers who want to profit off of a disaster. The Free Market doesn’t work by taking advantage of people during times of crisis! Laws don’t simply vanish. The reason Price Gouging happened is because there was NO GAS!!! Not limited gas, there was NO GAS!!! People had to take out their old dusty radios tune into their favorite local radio stations and wait and listen for updates on where to find gas to keep their children warm and comfortable at night!

Let me ask the pro-price gougers some simple questions:

  1. Do you really think higher gas prices would have made the lines shorter?? There was NOWHERE else to get gas!!!
  2. There are only 8 crooks being charged. How is this government intrusion so bad?? It’s not like we are still experiencing the gas shortage, so it’s not going to happen anymore for a good long amount of time.
  3. Why would you want to defend these 8 crooks anyway? Why not protest FEMA (or some other big government institution?) Because after all, the government steps in when the free market stops working or cannot fill the gaps. This is the state’s job and is purely constitutional!
  4. Whatever happened to state’s rights?

Also, if you all really cared about Hurricane Sandy, the poor people who lost all they had, and the bad government intrusion. You can always help out! I know some of you don’t live too far (or maybe some even live in) from the tri-state area. Again, I say the people defending these crooks are ridiculous, immoral, and wrong on all levels! I don’t care if you don’t agree with me. If you didn’t live through it. You just don’t know!


#12

[quote=“jjf3rd77, post:11, topic:37060”]
This not supposed to be the issue here. I lived through this mess and those who say that the price gougers shouldn’t be prosecuted are morons who are only protecting losers who want to profit off of a disaster. The Free Market doesn’t work by taking advantage of people during times of crisis! Laws don’t simply vanish. The reason Price Gouging happened is because there was NO GAS!!! Not limited gas, there was NO GAS!!! People had to take out their old dusty radios tune into their favorite local radio stations and wait and listen for updates on where to find gas to keep their children warm and comfortable at night!

Let me ask the pro-price gougers some simple questions:

  1. Do you really think higher gas prices would have made the lines shorter?? There was NOWHERE else to get gas!!!
  2. There are only 8 crooks being charged. How is this government intrusion so bad?? It’s not like we are still experiencing the gas shortage, so it’s not going to happen anymore for a good long amount of time.
  3. Why would you want to defend these 8 crooks anyway? Why not protest FEMA (or some other big government institution?) Because after all, the government steps in when the free market stops working or cannot fill the gaps. This is the state’s job and is purely constitutional!
  4. Whatever happened to state’s rights?

Also, if you all really cared about Hurricane Sandy, the poor people who lost all they had, and the bad government intrusion. You can always help out! I know some of you don’t live too far (or maybe some even live in) from the tri-state area. Again, I say the people defending these crooks are ridiculous, immoral, and wrong on all levels! I don’t care if you don’t agree with me. If you didn’t live through it. You just don’t know!
[/quote]Well said


#13

It helps if you get the facts correct.

There was, initially, no shortage of gasoline. There was no run on gasoline prior to the arrival of weather the results of which remained an unknown. What occurred after the devastation was a wide spread power outage. There was still no shortage of gasoline. What was lacking was electrical power at gas stations with which to pump the gasoline. Gas station tanks remained right at the levels they were at before the power went out.

With the wide spread power outages, there was an increased demand for generators and the gasoline they run on. That increased the market demand for gasoline, the supply of which had been artificially limited by the lack of power with which to pump it. And it put motorists in competition with home generator customer demands. Demand for gasoline skyrocketed.

Absent any allowed price mechanism, there was a run on gasoline with no mechanism for determining urgency of need. Motorists needing gas to get to jobs were put in competition with motorists who had no urgent need for gasoline, but didn’t want to run out. Both were in competition with home owners who needed gasoline for generators, along with home owners stockpiling gasoline for either generator use or potential generator use. What all buyers of gasoline shared in common was the total lack of any incentive to conserve gasoline.

Given that the price for gasoline was kept artificially low, being limited to rising only 10% from pre-storm prices, consumers received no price signal that gasoline was now more rare and therefore more valuable. Consumers bought it, and used it, in a manner befitting an ample and accessible supply. The power outages continued. Consumers drove, and ran generators, in a manner which would make sense only were there an ample supply of gasoline. Those stations with electrical power soon ran out of gasoline, putting successively greater pressure on those stations still with both. As a result, the state instituted rationing but, it did so still in a manner unreflective of actual consumer need. Rationing did nothing to increase the supply of available, pumpable gasoline…it merely made the gas lines shorter by its odd-even system.

Gasoline immediately became a black-market commodity commanding up to $20 per gallon. Black markets always arise when government artificially restricts supply of a commodity by the method of price fixing. And paradoxically, that price fixing itself increased the demand placed on gas stations because consumers with no need for gasoline themselves bought more than needed for purposes of resale.

As happens every day in the free market during normal times, the price of gasoline rises and falls based upon supply and demand. Demand goes up in the summer and no one thinks gas stations are gouging when each and every Memorial Day the price rises, and stays somewhat higher until Labor Day, when demand drops. Had such a market mechanism been allowed to work in NY/NJ it would have extended the supply for a longer time, from a limited number of stations able to pump, and ensured that those most desperate for it would have found it available. Those sitting home, with power and no need to go to work, would have stayed home and not gone out to buy gas, “just in case”. That alone would have seriously ameliorated the crisis. We know this run effect to be true because we observe it before every similar weather event in commodities more commonly needed, such as flashlight batteries, fresh milk and bread, and bottled water. We commonly see grocery stores sold out of such commodities and we know, just by running the numbers, that much of what is bought is not actually needed due to household shortage, even anticipated household shortage, but is bought for, “just in case”.

Had gasoline been allowed to rise to, say, $10 per gallon there would have been far, far less demand for it. That would have far better ensured that there remained a supply for those most critically in need of it, it would have created a tremendous incentive for gas station owners without power to purchase the larger sized generators needed for running multiple gas pumps simultaneously, and it would have precipitated the loading of tanker trucks throughout the tank farms within the regions to the west, encouraging otherwise disinterested truck drivers to reap a profit in resupplying empty gas stations with power, but no gas.

Instead, what happened is there were a lot of gas station owners without power, and no incentive to acquire power on their own, who sat home comfortable that they weren’t losing money by letting their gas sit in the ground. Had the price of gasoline been allowed to rise, those station owners would have been immediately ordering $10,000 large capacity generators out of every market that could deliver them in short order, so as to realize a windfall profit on the very ample gas reserves they had sitting in the ground at their stations. That did not happen. And thus, an unavoidable crisis was made worse by government action where none was required.

The demand, as in all crises, was that government “do something”. It did, and it made things worse, as more often than not it is wont to do. Had it let individuals act in their own best interest, the self interest of the market that supplies everything we need for the comfortable life we enjoy, a life that knows virtually no shortage of any basic commodity, there would not only have been more pumpable gasoline, it would have gone to those most in need, and the resupply chain would have been much more creative and efficient. And all those electricians sitting home, waiting for the power to come back on, so they could commence rewiring houses, would have been immediately busy wiring in generators.

Instead, those here appear to prefer the socialist solution that merely ensures shared misery by all concerned. Socialist; it’s what one calls those who either don’t believe in capitalism, or have no idea how it works. They always panic, demand government action, and then fail to take responsibility when, getting what they want, it only makes things worse.

The hilarity of it is that any fourteen year old kid with a snow shovel and a record-setting blizzard in the offing knows far better how the world works. With a foot of snow to remove, versus a more normal few inches, he sets out to make some money. Instead of his normal $5 per driveway, he charges $10 per driveway, and he doesn’t worry about those people who turn him down. The vast majority of them don’t need their driveway shoveled, for whatever reason…but mostly because they’re not going anywhere, and there are plenty of people who need it done as soon as possible. And guess what? When the kid runs into someone who must get out, but doesn’t have the money to pay his rate, he can afford to donate his services because he’s made a profit that allows him to be charitable. Now you understand not only how capitalism works, and also how charity works. Charity always comes from profits made above and beyond that required for the giver’s needs and survival. It comes because the kid made enough to replace the shovel he wore out “gouging” customers who willingly paid it for a job they valued in the amount paid.

And now you also understand why this country is on the fiscal rocks; it’s filled with people who want everything, but don’t think they should have to pay for the everything they want, while preferring that government take it from someone else via the impersonal method of confiscatory taxation.


#14

#15

You are wrong. There was no gasoline. If you don’t have electricity to open your gas station and to pump your gas, then you DON’T have gas. Hence you don’t have business!!! So yes, there was NO gas!

Again, you didn’t live it so you don’t know! Nobody anticipated that the gas stations would go out of power. Nobody anticipated buying $500 generators. Nobody needed to buy gas for the generators, “just in case.” We sure as hell didn’t! We all needed gas for the generators!!! We’ve never experienced a storm of this magnitude before. It’s always easier to think of what could have been done after the fact because then you know that the problem exists. You just don’t understand what it was like. People were like Zombies in survival mode mode except in this instance, they hunted for gas not human flesh.

No you’re wrong again! There were only 8 crooks that were charged with any crime. So why are you defending them?

Have you ever thought that the people wanted to prosecute the losers who tried to make a profit from a natural disaster? Ever think they wanted them charged because it was in their best interest? Still never answered my question about why it’s so intrusive to prosecute 8 people who broke the law.

No electrician that worked for the tri-state area and/or a good amount of the country was sitting at home the past few weeks. I can tell you that from people I know in the industry. You sir, just make crap up that is purely theoretical BS!

You’ve revealed yourself to all in this little statement. No wonder you side with the crooks you are one! I wouldn’t need your services btw. I’d shovel myself out thank you very much!

You guys who claim that you are capitalists aren’t really capitalists you are Anarcho-Fascists at best!


#16

How is free markets not capitalism and what is anarcho-fascism?


#17

Gasoline is a free market. Free Markets are capitalism. You can easily look up anarcho-fascism. Now are we done with the stupid questions?

You are talking about getting rid of rules that were already in place well before the storm. Rules which had they not been there would have helped the tri-state area inch closer to anarchy, which was close to what we were experiencing. People saw the price gouging starting and it could have gotten out of control if not stopped. Now, there are many instances when the government doesn’t do it’s job. But this is NOT one of them, and the people making this an issue are just calling attention to themselves for no good reason I can fathom.


#18

Gasoline actually isn’t a free market, and especially isn’t when there are price controls. If you are against price controls, you are a capitalist.

Not sure how Sway fits this description: National-Anarchism - Wikipedia, the free encyclopedia


#19

I didn’t say he was a national anarchist!

This discussion is becoming another irrelevant grammar love fest where we all discuss the philosophies of each of these different definitions. Another non-issue in a topic that shouldn’t even be an issue, as to my previous point that: Only 8 merchants are being charged with any crime!!! It’s 8 crooks. There is no use defending them since they already broke the law and did the illegal deed!
I’m not talking about what should be or shouldn’t be allowed in different philosophies. Those discussions are pointless and lead to nowhere. I’m talking about what is legal and what has happened!


#20

I’m not going to argue with someone who cannot make the distinction between a lack of gasoline and an inability to pump an ample supply of gasoline. To do so, particularly in the field of economics, would probably be an enterprise doomed before even begun. And there’s the compelling “Idiot Voter” thread yet to be gotten through.