Fuel Price Gouging & Overcharging
When fuels used by consumers, such as gasoline or diesel, are in especially short supply, retailers will often steeply raise the price. This process, sometimes labeled as a form of gouging, is controversial.
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Features
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The price of petroleum-based fuels is based on a number of factors, causing it to constantly vary. This includes the price of crude oil and the relative supply and demand of the fuel itself. Sometimes, the supply of crude or of a specific fuel can be severely limited, such as by a natural disaster. Reacting to the constricted supply, retailers raise prices.
Considerations
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Whether the practice of raising prices in this situation constitutes "gouging" is a matter of opinion. If consumers are willing to pay for fuel at an inflated price, the retailer may contend that he is simply operating according to the law of supply and demand. Or, if the retailer does not know when his inventory is going to be restocked and is left with only a few hundred gallons of gasoline, he may be raising prices simply to stay in business.
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Theories
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When prices for a commodity, such as fuel, rise dramatically, it generally incentivizes producers, eager to make profits, to increase the supply of that commodity. Theoretically, this increased supply will help meet demand, lowering the commodity's price. This "gouging," therefore, may simply be a mechanism by which the market finds an appropriate price for a good.
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References
- Photo Credit fuel pump image by DebbieO from Fotolia.com
