Prices and Reality

by Don Boudreaux on July 3, 2012

in Prices, Reality Is Not Optional

Here’s a letter to WTOP Radio in Washington, DC:

RE your “Reports of price gouging emerge in storm’s aftermath” (July 3).  Gasoline prices did indeed rise.  But this higher cost of gasoline wasn’t caused by gasoline-station owners; it was caused by the thunderstorms that disrupted gasoline supplies.  Higher prices at the pump merely reflected this regrettable fact.

Had station owners not raised prices at the pump, motorists would have spent more time queuing to buy gasoline – thus causing instead the time-cost of gasoline to rise.

So it’s pointless to complain to the Attorney General about being “gouged” by station owners who, by raising prices at the pump, obliged motorists to spend more money buying gasoline.  Had these prices not risen, motorists would instead have “gouged” each other by raising the amount of time they were willing to spend waiting in queues, thus obliging fellow motorists to spend more time buying gasoline.

Because time is indeed money, there was simply no escaping the reality that the storm made gasoline more costly.

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA  22030

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