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Monday, September 15, 2008

What is price gouging?

Gas is up to $5 a gallon in areas affected by Hurricane Ike, prompting a lot of people to complain of price gouging.  But what is price gouging?  Robert Rapier writes about the issue, and feels that it's a question of intent - are prices rising because...
  • inventories are short?
  • or, because folks get greedy?
We're better off having $10 a gallon gas if it means there's still some in the tanks, than $4 a gallon gas with empty tanks.

My idea would be that the state government should institute an emergency gas tax of at least $2 a gallon during these kinds of natural disasters.  The increased price would help reduce supply shortages and the revenue can be given back as a per capita tax rebate or used for disaster relief. 

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