≡ Menu

Open Letter to New York’s Attorney General

Mr. Eric Schneiderman
Attorney General, State of New York
Albany, NY

Dear Mr. Schneiderman:

Ignoring my requests to be removed from your e-mail list, your office continues to send to me daily updates of your Attorney Generaling exploits, most of which are economically misguided attacks on voluntary and beneficial market activities.  Today’s update is no exception.

In that update you brag of launching “12 more enforcement actions against gas retailers in post-Sandy price gouging investigation.”  But despite your accusation that these retailers were “ripping off New Yorkers,” the higher prices merely reflected the reality that gasoline was made much more scarce by a hurricane.  By severely disrupting supply chains, Sandy – not price-hiking retailers – made gasoline more costly to acquire.

If you insist, however, on prosecuting people for responding sensibly to market realities, why prosecute only price-hiking retailers?  You should prosecute also every motorist who waits in queues to buy gasoline.

Whenever government obstructs sellers’ abilities to raise prices at the pump, the method for allocating the few supplies among the many demanders is first-come, first-served.  Two inevitable results are long queues and the failure of many motorists to find gasoline to buy.  Each motorist who waits in line, therefore, raises the cost of gasoline to other motorists – both by increasing the amount of time that each motorist must spend waiting in line for a chance to buy gasoline, and by decreasing the chances that each motorist will actually find gasoline to buy.

So the logic that leads you to prosecute retailers for “unscrupulously” raising prices ought lead you also to prosecute motorists for “unscrupulously” queuing up.  Indeed, because queuing (unlike higher prices) creates no incentives for suppliers to bring more gasoline to market, queuing motorists, as you might describe their self-interested activities, rip each other off even worse than do price-hiking retailers.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030