Price Gouging?
09-13-2005 | 04:12 PM
#1
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From: Delaware, OH
Price Gouging?
I heard a fascinating series of stories on NPR this afternoon. First was a cheerful piece about real estate prices in Baton Rouge going up 25-50% (it wasn't clear from the context of the interview) followed immediately by a second story quoting a goverment official stating that price gouging is morally wrong.
Isn't it interesting that if a gas station owner bumps the price up by 25-50% just because hurricane victims need it bad, that's price gouging. But when the real estate cartel marks their product up 25-50% just because hurricane victims need it bad, that's a good thing.
Discuss.
Isn't it interesting that if a gas station owner bumps the price up by 25-50% just because hurricane victims need it bad, that's price gouging. But when the real estate cartel marks their product up 25-50% just because hurricane victims need it bad, that's a good thing.
Discuss.
09-13-2005 | 05:22 PM
#3
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From: Deptford, New Jersey
Originally Posted by tritium_pie,Sep 13 2005, 08:17 PM
I think it's morally wrong for a president (and government officials under him) to disgorge moral platitudes in lieu of actual leadership and equal representation.
09-14-2005 | 05:55 AM
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The demand/shortage for all labor compounds the problem even further. I got to experience that for myself here in Florida last year after all the hurricanes, and that was nothing on the scale of the damage on the Gulf Coast.Of course, I'm compelled to agree with tritium_pie's assessment also, which raises another question for me. If a drastic shortage of politicians were to suddenly occur because of a natural disaster, would their price go up too?
09-14-2005 | 10:39 AM
#6
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From: Houston, TX
Originally Posted by dean,Sep 14 2005, 08:55 AM
If a drastic shortage of politicians were to suddenly occur because of a natural disaster, would their price go up too?
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09-14-2005 | 12:00 PM
#8
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From: Houston, TX
SEPTEMBER 19, 2005
Just Making An Honest Buck?
Profiteering charges are flying, but retailers must often pass on high prices
While federal rescuers needed days to mobilize after Hurricane Katrina tore through the Gulf region, another group was on the scene almost immediately: profiteers. In Mississippi, state officials say a couple from Indiana rolled into Jackson and began selling $700 generators out of a horse trailer for as much as $2,600. In Texas, officials are probing complaints that some budget motels charged refugees from Louisiana up to $300 a night -- six times the normal rate. And the price-gouging wasn't limited to the Gulf region: With Katrina sending wholesale gas prices soaring, some stations as far away as Atlanta jacked up retail prices to as high as $6 a gallon.
Every time a hurricane or other disaster hits, the debate begins anew: Are rising prices a function of supply and demand or are they the result of price-gouging? Most Americans believe the latter; with gas prices up 17%, to top $3.00 a gallon on average since the hurricane hit, some 79% of respondents to a Gallup poll conducted on Sept. 5 and 6 said gasoline sellers were exploiting Katrina to charge unfair prices.
The public mood prompted some members of Congress to demand a national anti-gouging law. While that's unlikely, various states have already enacted such legislation. And the latest outbreak of price hikes has officials from California to the Katrina-stricken region pledging to crack down before gas costs spiral out of control. Vows Mississippi Attorney General Jim Hood: "I'm going to send some people to the penitentiary before this is over."
Perhaps. But proving that someone is profiteering is harder than it might seem. To make a case, investigators usually compare the price an alleged gouger is charging for essential commodities with the price 30 days before a state of emergency is declared. If the price rises sharply during the period, the merchant must prove that he or she maintained roughly the same profit margin as before -- and that the price increase was the result of wholesale costs. In Florida, Attorney General Charlie Crist says that in "about 95%" of the complaints received by consumers, retailers were able to demonstrate that their wholesale costs had risen.
PANIC BUYING
That has certainly been the case this time with plywood, which soared nearly 20% in commodity markets as homebuilders and distributors raced to lock in supplies ahead of an anticipated rebuilding of New Orleans. "It's not so much profiteering as panic buying out of fear there will be shortages later on," says Michael Carliner, an economist for the National Association of Home Builders.
And for all the outcry about soaring gas prices, some industry experts say that state investigators will have a hard time bringing profiteering charges against gas stations. They note that many independent retailers, which make up the vast majority of stations, are subject to complex contracts in which they're charged the daily wholesale price. To maintain their own profit margins, they must raise prices as soon as wholesale prices start rising -- even for gasoline that's already on hand.
Moreover, as upset as consumers are getting, the market seems to be working. Tom Kloza, chief oil analyst for Oil Price Information Service, a Rockville (Md.) oil information service, notes that wholesale prices surged from the equivalent of $1.90 the Friday before Katrina hit to as much as $3.10 a gallon the Wednesday after. Add transportation costs, state and local taxes, the 2.5% credit-card processing charge, and the 5% to 10% markup that many retailers earn on gas sales, and that works out to between $3.70 and $3.90 a gallon -- in line with what some stations were charging in high-cost markets.
Just Making An Honest Buck?
Profiteering charges are flying, but retailers must often pass on high prices
While federal rescuers needed days to mobilize after Hurricane Katrina tore through the Gulf region, another group was on the scene almost immediately: profiteers. In Mississippi, state officials say a couple from Indiana rolled into Jackson and began selling $700 generators out of a horse trailer for as much as $2,600. In Texas, officials are probing complaints that some budget motels charged refugees from Louisiana up to $300 a night -- six times the normal rate. And the price-gouging wasn't limited to the Gulf region: With Katrina sending wholesale gas prices soaring, some stations as far away as Atlanta jacked up retail prices to as high as $6 a gallon.
Every time a hurricane or other disaster hits, the debate begins anew: Are rising prices a function of supply and demand or are they the result of price-gouging? Most Americans believe the latter; with gas prices up 17%, to top $3.00 a gallon on average since the hurricane hit, some 79% of respondents to a Gallup poll conducted on Sept. 5 and 6 said gasoline sellers were exploiting Katrina to charge unfair prices.
The public mood prompted some members of Congress to demand a national anti-gouging law. While that's unlikely, various states have already enacted such legislation. And the latest outbreak of price hikes has officials from California to the Katrina-stricken region pledging to crack down before gas costs spiral out of control. Vows Mississippi Attorney General Jim Hood: "I'm going to send some people to the penitentiary before this is over."
Perhaps. But proving that someone is profiteering is harder than it might seem. To make a case, investigators usually compare the price an alleged gouger is charging for essential commodities with the price 30 days before a state of emergency is declared. If the price rises sharply during the period, the merchant must prove that he or she maintained roughly the same profit margin as before -- and that the price increase was the result of wholesale costs. In Florida, Attorney General Charlie Crist says that in "about 95%" of the complaints received by consumers, retailers were able to demonstrate that their wholesale costs had risen.
PANIC BUYING
That has certainly been the case this time with plywood, which soared nearly 20% in commodity markets as homebuilders and distributors raced to lock in supplies ahead of an anticipated rebuilding of New Orleans. "It's not so much profiteering as panic buying out of fear there will be shortages later on," says Michael Carliner, an economist for the National Association of Home Builders.
And for all the outcry about soaring gas prices, some industry experts say that state investigators will have a hard time bringing profiteering charges against gas stations. They note that many independent retailers, which make up the vast majority of stations, are subject to complex contracts in which they're charged the daily wholesale price. To maintain their own profit margins, they must raise prices as soon as wholesale prices start rising -- even for gasoline that's already on hand.
Moreover, as upset as consumers are getting, the market seems to be working. Tom Kloza, chief oil analyst for Oil Price Information Service, a Rockville (Md.) oil information service, notes that wholesale prices surged from the equivalent of $1.90 the Friday before Katrina hit to as much as $3.10 a gallon the Wednesday after. Add transportation costs, state and local taxes, the 2.5% credit-card processing charge, and the 5% to 10% markup that many retailers earn on gas sales, and that works out to between $3.70 and $3.90 a gallon -- in line with what some stations were charging in high-cost markets.
09-14-2005 | 04:36 PM
#9
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From: Clifton, VA
For the last week or so Costco in our area has had a ban on filling any other container besides the gas tank on a vehicle with fuel. Today, they were out of 93 Octance gas. I did find a BP station down the road in Manassas, VA that had 93 octance for $303.9 compared to my local Shell stations that were both at $3.26.9 for 93 Octane.
09-14-2005 | 04:51 PM
#10
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From: Houston, TX
Just in case you did not know...
BP Cuts Gasoline Prices At Some Points Retroactively; Toughens Restrictions
By Tom Kloza
Oil Price Information Service
August 31, 2005
BP has rolled back some wholesale branded gasoline prices and has kept lower-than-market prices intact at a number of locations across its network.
The action is being interpreted in some parts as "responsible", and in others as a smart public relations move, but the net result is that the refiner will have much lower branded rack prices tomorrow than many of its branded counterparts, and prices as much as 50-75cts gal below unbranded gasoline numbers.
OPIS confirmed that BP retroactively dropped gasoline prices by 10cts gal at a number of terminals on the Magellan system by 10cts gal. The move is retroactive to 12:01 A.M. Wednesday according to notification.
Meanwhile, marketers at some southeastern points say that the refiner did not raise branded gasoline at the normal 6 PM effective dates this evening, although there were some distillate hikes.
BP has been down this path before, freezing prices in the immediate days subsequent to the 9-11 attacks. The company's ARCO division, which was not under BP aegis at the time, also froze prices during the early stages of the Persian Gulf War.
The refiner does have some of the toughest restrictions for its branded gallons, however. In some cases it is taking a volume based on the last 30 days of purchases and dividing it by 30 to come up with a daily quota. That number is in turn multiplied by 7 for a weekly allocation. The catch is that jobbers are only able to pick up 75% of that weekly number, according to the understanding of some jobbers.
Copyright 2005, Oil Price Information Service.
By Tom Kloza
Oil Price Information Service
August 31, 2005
BP has rolled back some wholesale branded gasoline prices and has kept lower-than-market prices intact at a number of locations across its network.
The action is being interpreted in some parts as "responsible", and in others as a smart public relations move, but the net result is that the refiner will have much lower branded rack prices tomorrow than many of its branded counterparts, and prices as much as 50-75cts gal below unbranded gasoline numbers.
OPIS confirmed that BP retroactively dropped gasoline prices by 10cts gal at a number of terminals on the Magellan system by 10cts gal. The move is retroactive to 12:01 A.M. Wednesday according to notification.
Meanwhile, marketers at some southeastern points say that the refiner did not raise branded gasoline at the normal 6 PM effective dates this evening, although there were some distillate hikes.
BP has been down this path before, freezing prices in the immediate days subsequent to the 9-11 attacks. The company's ARCO division, which was not under BP aegis at the time, also froze prices during the early stages of the Persian Gulf War.
The refiner does have some of the toughest restrictions for its branded gallons, however. In some cases it is taking a volume based on the last 30 days of purchases and dividing it by 30 to come up with a daily quota. That number is in turn multiplied by 7 for a weekly allocation. The catch is that jobbers are only able to pick up 75% of that weekly number, according to the understanding of some jobbers.
Copyright 2005, Oil Price Information Service.