Economic Ignorance Further Hampers Hurricane Sandy Victims

William Ward
The miles-long lines at beleaguered service stations in the aftermath of Sandy is a testament to an elementary economic reality; sharply higher prices are mandatory in a disaster. During such a radical supply/demand altering event, sharply higher prices must prevail in order for more consumers to receive the desperately-needed commodity. And the economic ignorance of politicians who vow mass prosecutions for price gouging -- as popular as it may be with the media and the affected masses -- only serves to thwart the survival and recovery efforts of the victims.

Nobody likes paying higher prices. In fact, when one has received a major blow to their lives, higher prices easily appear to be criminal. Understandable as it is, this is an emotional rather than a rational reaction to an economic law that is attempting to best serve the dire interests of as many people as possible. The basic tenet of economic principle -- price relation to supply vs. demand -- is to accomplish one fundamental task: ensure that a finite commodity is distributed to as many consumers as possible.

Once the electrical capacity of the community has been decimated and reduced to generator power, servicing of the generators become a great priority that results in urgent demand which was not present prior to the event. That new demand must be reflected in current price before emotional hoarding exhausts supplies.

A service-station owner who witnesses desperate lines of cars forming at his gas pumps is economically justified in taking prices sharply higher if each car in the line is taking advantage of current price to fill the vehicle and multiple receptacles to the detriment of people waiting further back in line. Failure to take such price action is, in fact, a disservice to the needs of the people who will be denied this desperately needed commodity once the tank is tapped dry by the hoarding of those who were blessed with a favorable spot in line.

Current media reports clearly illustrate how misguided government attempts to maintain "fairness" in the face of almost impossible survival conditions serves no one but the black market. In New Jersey, where officials are eying retailers who charge $1 higher prices to fill up handheld canisters for violations under the state's Motor Fuels Act, CraigsList postings are marketing black market fuel for $15 a gallon.

The stark reality is that until more supply can be brought to the disaster area, prices will rise -- one way or another -- to the level which ensures most efficient usage.

The miles-long lines at beleaguered service stations in the aftermath of Sandy is a testament to an elementary economic reality; sharply higher prices are mandatory in a disaster. During such a radical supply/demand altering event, sharply higher prices must prevail in order for more consumers to receive the desperately-needed commodity. And the economic ignorance of politicians who vow mass prosecutions for price gouging -- as popular as it may be with the media and the affected masses -- only serves to thwart the survival and recovery efforts of the victims.

Nobody likes paying higher prices. In fact, when one has received a major blow to their lives, higher prices easily appear to be criminal. Understandable as it is, this is an emotional rather than a rational reaction to an economic law that is attempting to best serve the dire interests of as many people as possible. The basic tenet of economic principle -- price relation to supply vs. demand -- is to accomplish one fundamental task: ensure that a finite commodity is distributed to as many consumers as possible.

Once the electrical capacity of the community has been decimated and reduced to generator power, servicing of the generators become a great priority that results in urgent demand which was not present prior to the event. That new demand must be reflected in current price before emotional hoarding exhausts supplies.

A service-station owner who witnesses desperate lines of cars forming at his gas pumps is economically justified in taking prices sharply higher if each car in the line is taking advantage of current price to fill the vehicle and multiple receptacles to the detriment of people waiting further back in line. Failure to take such price action is, in fact, a disservice to the needs of the people who will be denied this desperately needed commodity once the tank is tapped dry by the hoarding of those who were blessed with a favorable spot in line.

Current media reports clearly illustrate how misguided government attempts to maintain "fairness" in the face of almost impossible survival conditions serves no one but the black market. In New Jersey, where officials are eying retailers who charge $1 higher prices to fill up handheld canisters for violations under the state's Motor Fuels Act, CraigsList postings are marketing black market fuel for $15 a gallon.

The stark reality is that until more supply can be brought to the disaster area, prices will rise -- one way or another -- to the level which ensures most efficient usage.