Monday’s order by Florida Attorney General Pam Bondi forbids price-gouging in 34 counties in advance of Tropical Storm Colin, but Palm Beach, Martin and St. Lucie counties are not among them. Normal gouging activities are not affected in most of southeast Florida.
State law prohibits “extreme increases in the price of essential commodities, such as food, water, hotels, ice, gasoline, lumber” and other equipment needed as a direct result of an officially declared emergency, Bondi’s office explains.
“Florida consumers need to be diligent during this state of emergency to ensure they do not become victims of price gouging,” Bondi said in a statement. “Taking advantage of consumers during a declared state of emergency is not only reprehensible, it is illegal and will not be tolerated.”
This is boilerplate talk before a storm to discourage profiteers, but it raises old debates about laws that try to keep a lid on prices in disasters. Florida’s law forbids pricing that “grossly exceeds the average price at which the same or similar commodity was readily obtainable in the trade area during the 30 days immediately prior to a declaration of a state of emergency.” OK, but what is “grossly excessive” in percentage or dollar terms?
After 2008’s Hurricane Ike threatened to disrupt gasoline supplies and affect prices, for example, more than 10,000 Floridians complained about price-gouging. At least two retail stations in north and central Florida agreed to settlements of about $6,000.
Still, one man’s gouging is another man’s free market in action.
“There is no such thing as price-gouging, period,” said Alex Epstein, an analyst for the Ayn Rand Center for Individual Rights, a Washington-based espouser of free-market policies. “Price-gouging laws should not be allowed, period. The last thing we should want in a crisis is for people to be afraid to produce gas or sell it at a market price.”
Freezing prices only discourages producers from providing more of a product to areas that need it, he told the Palm Beach Post in 2009. Higher prices attract more supply, which tends to stabilize prices in due course, he said.
But try giving that lecture in how markets work to people reeling from a storm. People often feel outraged, abused and exploited if they face really steep price hikes for a bottle of water or a gallon of gas, said David Hoffman, associate professor of law at Temple University.
“I think price-gouging laws will always be with us,” Hoffman said.