4 ms·

'How bad they need it' and 'How much money they have to spend' are often completely unrelated. With 'price gouging laws' you also include 'rationing' which can

'How bad they need it' and 'How much money they have to spend' are often completely unrelated. With 'price gouging laws' you also include 'rationing' which can and does often generated considerably better outcomes.

WalterBright 5y ago
People who need it more demonstrate that need by being willing to pay more for it. > does often generated considerably better outcomes. Nope. Usually, it generates criminal redistribution activity, hoarding, a greatly reduced supply, etc. All the miserable characteristics of a centrally planned economy. During the gas crisis of the 1970s, gas stations could not sell gas until they were allocated (rationed) gas by the D.O.E. The allocation was based on the previous year's usage pattern. Of course, nothing stays the same, and one year Florida was overflowing with gas while there were loooong lines on the west coast. Also there were lovely instances of one gas station appealing to the DOE to get the allocation of the gas station across the street cut off as being "unneeded". All these problems disappeared literally overnight when Reagan, as his first act as President, signed an Executive Order eliminating all oil & gas price controls and allocation. I know it was overnight, because I remember the gas lines evaporating the very next day and never returning in the 40 years since.
- monocasa 5y ago
  Commonly accepted historical viewpoints of the gas crisis of 1979 and subsequent easing in 1980 don't seem to blame controls on gas, but instead the Iranian revolution and Iraqi invasion of Iran disrupting the west's access to large amounts of oil, and the supply bubble in OPEC's subsequent increases in production to overcome that which finally hit was seen by consumers byte the end of 1980 (before Reagan was elected). Reagan's removal of price controls are thought to be ultimately orthogonal. Additionally there have empirically been gas lines in the US in the 40 years since 1980.
  - opo 5y ago
    >...but instead the Iranian revolution and Iraqi invasion of Iran The US suffered much more in 1979 from the disruption of the oil from Iran than other countries that also relied on this oil. It would be wrong to ignore the role the government played in making this oil disruption significantly worse. From "TheU.S. Petroleum Crisis of 1979", PHILIP K. VERLEGER, JR. >...On February 28, 1979, DOE published the following notice in the Federal Register: "It is essential that refiners enter the spring driving season with adequate gasoline stocks to meet seasonal demand requirements. We recognize that gasoline stocks are currently at adequate levels for this time of year, which is usually a period of low demand. Recent industry data indicate that total stocks are now in excess of 265 million barrels, which is less than last year's record high levels during the same period but above the average levels of previous years. Our concern is that these stocks not be drawn down precipitously as soon as the impacts of the Iranian shortfall are felt by refiners. Refiners are urged to keep stocks high enough to meet expected demand during the 1979 summer driving season, even if it is necessary to restrict somewhat the amount of surplus gasoline that is made available to purchasers currently" >The implementation of these instructions had the effect of restricting the volume of gasoline available to service stations to between 80 and 90 percent of 1978 levels. This reduction was greater than the reduction in total gasoline supplies. >...In April 1979, DOE ordered the fifteen largest refiners to sell 7.8 million barrels of crude oil to smaller firms that were unable to obtain supplies on the world market at competitive prices. …These transfers probably reduced the volume of gasoline produced in the second quarter because the refineries that purchased the crude oil had only a limited capacity to produce gasoline, while the refineries that sold it could have produced more. ...In addition to reducing the supply of gasoline, the buy/sell program appears to have affected the geographic distribution of crude oil and gasoline. This is because the primary recipients of the crude oil were refineries in the Midwest and the gulf coast areas, while the sellers were companies that were marketing throughout the nation. >...…In April, DOE turned its attention to the low stock of distillate fuel oil … Two impacts were observed on domestic markets. First, excessive stocks of heating oil were accumulated. Second, companies may have been influenced to increase gasoline stocks in anticipation of the mandator yield controls that DOE threatened to impose. These controls specified the percent of refiner output that had to be heating oil. Such controls were designed to curtail the output of gasoline. By building higher gasoline inventories, refiners could smooth out the month-to-month distribution of gasoline despite the controls. >...Price controls on gasoline may have also created an incentive to withhold gasoline from the market when the prices of crude oil were rising rapidly. …In summary, the refiners had the capacity and the knowledge to take advantage of this opportunity. Ironically, the instructions from DOE to the companies were to do precisely what was most profitable. >...In addition to encouraging the buildup of stocks, DOE may have added to the shortages by creating an incentive to reduce the output of crude oil. Although it is difficult to estimate what domestic supplies of crude oil might have been in the absence of any restriction, a DOE announcement in November that control levels of the base period were to be reviewed may have constrained production in the first half of 1979.
- jollybean 5y ago
  Healthcare pricing is regulated and effectively fixed in all modern economies except for the US. The same goes for rent controls which are ubiquitous in most of Canada and Europe. And where is the 'black market' for these vast economies? These ridiculous references to 'communism' are an intellectual canard. There is no such thing as a 'free market' - a market is a dynamic equilibrium of the balance of power. This becomes a problem when power is asymetrical, i.e. in monopoly, or monopoly-like situations such as 'sole provider of a drug' in which case there is always regulation. If the 'free market' were fully effective, Phizer would be selling vaccines at Wallgreens instead of via the US Gov.. But it's not, and so we're not, because it wouldn't work as the 'profit maximizing' price point for the vaccine is way above what most people would be willing to pay.
  - nickpp 5y ago
    > references to 'communism' are an intellectual canard For me, they are references to actual events in my past. Unable to provide the bare necessities, in the 80's, the Communist State's central planners had rationed bread, sugar, flour and vegetable oil. A black market has promptly sprung up. Its vendors ranged from regular folks who did not use their entire ration to illegal "entrepreneurs" who had other means of getting stuff. This market could easily tell you the actual price of these goods. But you had to be careful because some of the participants where actual Secret Service laying traps. It was illegal after all...
deleted 5y ago
[deleted]

WalterBright 5y ago

People who need it more demonstrate that need by being willing to pay more for it. > does often generated considerably better outcomes. Nope. Usually, it generates criminal redistribution activity, hoarding, a greatly reduced supply, etc. All the miserable characteristics of a centrally planned economy. During the gas crisis of the 1970s, gas stations could not sell gas until they were allocated (rationed) gas by the D.O.E. The allocation was based on the previous year's usage pattern. Of course, nothing stays the same, and one year Florida was overflowing with gas while there were loooong lines on the west coast. Also there were lovely instances of one gas station appealing to the DOE to get the allocation of the gas station across the street cut off as being "unneeded". All these problems disappeared literally overnight when Reagan, as his first act as President, signed an Executive Order eliminating all oil & gas price controls and allocation. I know it was overnight, because I remember the gas lines evaporating the very next day and never returning in the 40 years since.

monocasa 5y ago
Commonly accepted historical viewpoints of the gas crisis of 1979 and subsequent easing in 1980 don't seem to blame controls on gas, but instead the Iranian revolution and Iraqi invasion of Iran disrupting the west's access to large amounts of oil, and the supply bubble in OPEC's subsequent increases in production to overcome that which finally hit was seen by consumers byte the end of 1980 (before Reagan was elected). Reagan's removal of price controls are thought to be ultimately orthogonal. Additionally there have empirically been gas lines in the US in the 40 years since 1980.
- opo 5y ago
  >...but instead the Iranian revolution and Iraqi invasion of Iran The US suffered much more in 1979 from the disruption of the oil from Iran than other countries that also relied on this oil. It would be wrong to ignore the role the government played in making this oil disruption significantly worse. From "TheU.S. Petroleum Crisis of 1979", PHILIP K. VERLEGER, JR. >...On February 28, 1979, DOE published the following notice in the Federal Register: "It is essential that refiners enter the spring driving season with adequate gasoline stocks to meet seasonal demand requirements. We recognize that gasoline stocks are currently at adequate levels for this time of year, which is usually a period of low demand. Recent industry data indicate that total stocks are now in excess of 265 million barrels, which is less than last year's record high levels during the same period but above the average levels of previous years. Our concern is that these stocks not be drawn down precipitously as soon as the impacts of the Iranian shortfall are felt by refiners. Refiners are urged to keep stocks high enough to meet expected demand during the 1979 summer driving season, even if it is necessary to restrict somewhat the amount of surplus gasoline that is made available to purchasers currently" >The implementation of these instructions had the effect of restricting the volume of gasoline available to service stations to between 80 and 90 percent of 1978 levels. This reduction was greater than the reduction in total gasoline supplies. >...In April 1979, DOE ordered the fifteen largest refiners to sell 7.8 million barrels of crude oil to smaller firms that were unable to obtain supplies on the world market at competitive prices. …These transfers probably reduced the volume of gasoline produced in the second quarter because the refineries that purchased the crude oil had only a limited capacity to produce gasoline, while the refineries that sold it could have produced more. ...In addition to reducing the supply of gasoline, the buy/sell program appears to have affected the geographic distribution of crude oil and gasoline. This is because the primary recipients of the crude oil were refineries in the Midwest and the gulf coast areas, while the sellers were companies that were marketing throughout the nation. >...…In April, DOE turned its attention to the low stock of distillate fuel oil … Two impacts were observed on domestic markets. First, excessive stocks of heating oil were accumulated. Second, companies may have been influenced to increase gasoline stocks in anticipation of the mandator yield controls that DOE threatened to impose. These controls specified the percent of refiner output that had to be heating oil. Such controls were designed to curtail the output of gasoline. By building higher gasoline inventories, refiners could smooth out the month-to-month distribution of gasoline despite the controls. >...Price controls on gasoline may have also created an incentive to withhold gasoline from the market when the prices of crude oil were rising rapidly. …In summary, the refiners had the capacity and the knowledge to take advantage of this opportunity. Ironically, the instructions from DOE to the companies were to do precisely what was most profitable. >...In addition to encouraging the buildup of stocks, DOE may have added to the shortages by creating an incentive to reduce the output of crude oil. Although it is difficult to estimate what domestic supplies of crude oil might have been in the absence of any restriction, a DOE announcement in November that control levels of the base period were to be reviewed may have constrained production in the first half of 1979.
jollybean 5y ago
Healthcare pricing is regulated and effectively fixed in all modern economies except for the US. The same goes for rent controls which are ubiquitous in most of Canada and Europe. And where is the 'black market' for these vast economies? These ridiculous references to 'communism' are an intellectual canard. There is no such thing as a 'free market' - a market is a dynamic equilibrium of the balance of power. This becomes a problem when power is asymetrical, i.e. in monopoly, or monopoly-like situations such as 'sole provider of a drug' in which case there is always regulation. If the 'free market' were fully effective, Phizer would be selling vaccines at Wallgreens instead of via the US Gov.. But it's not, and so we're not, because it wouldn't work as the 'profit maximizing' price point for the vaccine is way above what most people would be willing to pay.
- nickpp 5y ago
  > references to 'communism' are an intellectual canard For me, they are references to actual events in my past. Unable to provide the bare necessities, in the 80's, the Communist State's central planners had rationed bread, sugar, flour and vegetable oil. A black market has promptly sprung up. Its vendors ranged from regular folks who did not use their entire ration to illegal "entrepreneurs" who had other means of getting stuff. This market could easily tell you the actual price of these goods. But you had to be careful because some of the participants where actual Secret Service laying traps. It was illegal after all...

deleted 5y ago

[deleted]