Government Creates Shortages by “Protecting” Consumers

By punishing “price gouging,” the government creates shortages and makes them last longer.

Declaring a “state of emergency,” we got to see how the Tennessee government creates shortages. The news came out over the weekend. According to Fox 17,

The emergency declaration will allow drivers to work longer hours to ensure petroleum is available to convenience stores, fuel retailers, and fuel wholesalers in Tennessee. Executive Officer for External Relations Dean Flener said the price gouging laws are in effect:

“Tennessee’s price gouging laws make it unlawful for individuals and businesses to charge unreasonable prices for essential goods and services including gasoline, food, ice, fuel, generators, lodging, storage space, and other necessities in direct response to a disaster regardless of whether that emergency occurred in Tennessee or elsewhere. The price gouging law makes it unlawful to charge a price that is grossly in excess of the price charged prior to the emergency.”

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Sounds noble doesn’t it?

But if we want “drivers to work longer hours,” what is going to make them do that?

Are they supposed to work extra hours for free? I hope not. I don’t think the governor of any state has the authority to enslave people.

In fact, typically, when someone has to work more hours he expects overtime pay. Where is that money going to come from? If it comes from a new higher price for gasoline, the companies run the risk of being accused of charging “unreasonable” prices. Then they will also have to pay lawyers to argue their case in court, making the gas still more expensive to deliver to market.

These laws give gas companies every reason to simply let gasoline and other “essential goods and services” run out.

Worse, they produce irresponsible behavior on the part of consumers. When there is a crisis in the supply of fuel, we need consumers to try to use as little fuel as possible until the crisis is resolved. But when you know fuel might run out, you naturally want to do the opposite and make sure you fill your tank. Who knows when you will get to fill it again?

Thus, the Tennessean reported Sunday,

Fuel wholesalers are delivering gas to Tennessee stations as quickly and safely as possible, but higher than usual fuel purchases are complicating resupplying efforts.

Executive director of the Tennessee Fuel and Convenience Store Association Emily LeRoy said that while supply is tight in the Southeast, there is fuel available and consumers should not make the problem worse by panicking.

If only the free market had a natural mechanism for getting consumers to conserve resources in short supply. Oh wait! It does have such a mechanism. It is called “the price.” If the gas price was allowed to rise, not only would workers be paid for their extra time, but consumers would use as little as possible.

Additionally, the high price would attract more suppliers to the area which would end the shortage sooner.

The government creates shortages by obstructing the market from resolving a crisis in the most efficient way possible.


Joe Scudder

Joe Scudder is the "nom de plume" (or "nom de guerre") of a fifty-ish-year-old writer and stroke survivor. He lives in St Louis with his wife and still-at-home children. He has been a freelance writer and occasional political activist since the early nineties. He describes his politics as Tolkienesque.

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