‘Gouging’ anxiety is just outrage over arithmetic

09/12/2005
With regard to anxiety about gasoline price “gouging” arising from Hurricane Katrina’s unprecedented disruption of US oil supply, a few observations need to be made.The allegations flow from assumptions that prices shouldn’t rise in a supply emergency, or that they shouldn’t rise as much as they do, and that if they do-and especially if sellers’ profits rise at the same time-the reason must be gouging.The problem here is obsession over price to the exclusion of sales volume.Businesses in the delivery system for oil products base decisions about pricing and everything else on profits: total revenue minus total cost. In a supply emergency, costs rise. Rev...
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