I'm hearing about interesting situations regarding "price gouging" in the areas affected by the Hurricane Matthew. Apparently, there are state laws in place to keep people from overcharging, and that seems only right. But let's look at things from the other side--especially when it comes to situations where there is limited product (i.e., things could run out because of unusually high demand).
Let's consider a family of 5 people that has to evacuate the area--perhaps a married couple with two children under age 12, as well as the widowed mother of one of the parents. They all live in one house, but they have to evacuate to someplace about 300 miles away--someplace to where many, many people from their area are also heading. There will be a MUCH higher than normal demand for things such as gasoline, food, water, and housing. Let's keep the math simple, and make everything a 3:1 ratio.
Say gasoline is normally $2 per gallon, a gallon of water is $1, a fast food meal is $5, and a motel room is $100. The family owns 3 vehicles (one per each adult) and decides to take all three vehicles out of harm's way. That puts 3 vehicles on the evacuation road,all of which need gasoline. When the family stops for food, they stock up on food and water, getting extra "to go." When they get to where they feel they can safely lodge in a motel for several days or more, they decide that they can afford to get 3 rooms--one for mom and a child, one for dad and a child, and one for grandma. Total bill for the evacuation until getting back home for lodging, food, water, and gasoline comes to between $1500 and $2000.
But say that the price of gasoline suddenly goes to $6, a gallon of water to $3, a fast food meal to $15, and a motel room to $300. The first thought is often that the $1500-$2000 expense leaps to an expense of $4500-$6000.
Or does it?
What if the high cost of gasoline causes the family to just evacuate in ONE vehicle instead of three? Suddenly the amount of gasoline used by this family is just one-third of what it would have been. Additionally, there is more gasoline supply for other people, and fewer vehicles congesting the evacuation road.
What if the high cost of a motel room caused all five of the people in the family to share one room instead of spreading out into three rooms? That makes more rooms available for other people before the motel runs out of vacancy.
What if the higher cost of food causes the family to eat smaller portions and forego extras, such as ordering food "to go" to have for snacks later? This will leave more food before the eating establishments run out, so that they are able to provide food to more people.
Multiply this situation by tens of thousands of families, and from a perspective of being able to have enough supplies and accommodations for as many people as possible, perhaps the high prices actually are beneficial.
I'm not saying that price gouging is good. I'm not saying that there are not greedy people who will do basically anything they can to make as much money as they possibly can. I strongly encourage people to be generous. But as with many things in life, there is more than one facet to consider.
The bottom line is that I hope that people stay safe, that they get the gasoline, food, water, and housing that they need, and that those who have are generous towards those who need.
But say that the price of gasoline suddenly goes to $6, a gallon of water to $3, a fast food meal to $15, and a motel room to $300. The first thought is often that the $1500-$2000 expense leaps to an expense of $4500-$6000.
Or does it?
What if the high cost of gasoline causes the family to just evacuate in ONE vehicle instead of three? Suddenly the amount of gasoline used by this family is just one-third of what it would have been. Additionally, there is more gasoline supply for other people, and fewer vehicles congesting the evacuation road.
What if the high cost of a motel room caused all five of the people in the family to share one room instead of spreading out into three rooms? That makes more rooms available for other people before the motel runs out of vacancy.
What if the higher cost of food causes the family to eat smaller portions and forego extras, such as ordering food "to go" to have for snacks later? This will leave more food before the eating establishments run out, so that they are able to provide food to more people.
Multiply this situation by tens of thousands of families, and from a perspective of being able to have enough supplies and accommodations for as many people as possible, perhaps the high prices actually are beneficial.
I'm not saying that price gouging is good. I'm not saying that there are not greedy people who will do basically anything they can to make as much money as they possibly can. I strongly encourage people to be generous. But as with many things in life, there is more than one facet to consider.
The bottom line is that I hope that people stay safe, that they get the gasoline, food, water, and housing that they need, and that those who have are generous towards those who need.
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