Unfair price hikes during Hurricane Irma
Jordan Ryan | Wednesday, September 13, 2017
This past weekend, I called my aunt to see how her preparations for Hurricane Irma were coming along. She lives in Palm Coast, Florida, a modest residential community located about 30 miles north of Daytona along the Atlantic coast. Gearing up for a hurricane is not unfamiliar to her. She goes shopping, stocks up and prepares for a very boring and bleak few days. What I didn’t realize was the brutal cost of preparing for such an emergency. She told me that a gallon of gas rose to $7.20 in the week before Irma was expected to make landfall. A 24-pack of water cost a whopping $39. These outrageous prices are immoral at a time of desperation. Legislative intervention ought to prevent such businesses from capitalizing on the fear, misery and necessity of consumers. There is a clear moral justification for ending or minimizing these unprincipled practices.
In addition to the loss of lives, the destruction of homes and the disruption of the lives of countless families, this hurricane season has not been kind to the wallets of consumers. Residents of Texas reported charges of $8.50 for a single water bottle last week and $20 for a gallon of gas. In some towns, cases of water were going for as much as $99.
There are clear reasons why there needs to be prohibitions on price gouging during times of natural disaster. Hikes in medicine prices pose severe health risks to consumers. Residents, along with emergency personnel, can be deprived of essential commodities. Thousands of lives will be placed at risk without access to basic necessities like water, food, gas and medicine.
What is especially troubling about these horrid price increases is their effect on the most vulnerable members of our communities. Those with low incomes can under no circumstances afford these necessities. They along with shelters, food banks and other help centers also cannot afford these prices. The result is a maximized disparity between classes, which is utterly unacceptable during a time of crisis.
A few states have taken action to discourage this unconscionable behavior. California has enacted an anti-price gouging law, which allows only a maximum of a 10 percent increase in prices during a time of emergency. South Carolina passed its own anti-price gouging law this past week in anticipation of Hurricane Irma. Louisiana and Texas also enacted anti-price gouging legislation in anticipation of Hurricane Harvey’s arrival.
Unfortunately, these laws have proven difficult to enforce. Though Texas enacted legislation prohibiting against exorbitant price increases, residents still experienced insane prices. Florida has put in effect similar legislation, which prohibits “grossly excessive” price increases. Unfortunately, the law is largely being ignored. Since the state of emergency was declared on Sept. 4, 2017, Florida’s Attorney General has received an average of 100 complaints per hour from consumers concerning price gouging.
Those who oppose such legislation justify dramatic price increases in times of emergency on several grounds. First, increased prices encourage consumers to only purchase as much as they need, thereby avoiding hoarding. Without such high prices, whoever reaches the grocery store first could buy out all the bottled water, leaving others without necessary goods. Additionally, price gouging may encourage a sufficient supply of goods. Businesses are more apt to maintain a greater supply of commodities if they are able to generate what they believe to be an appropriate profit. These arguments are simply justifications for what are, in larger part, immoral and scandalous behaviors. Though slight price increases may be necessary, gouging water bottle prices to up to $7 a bottle is simply unwarranted.
A number of academics have suggested possible solutions to avoid such disastrous increases during tines such as these. For example, Rafi Mohammed of the Harvard Business Review writes that to ensure an adequate supply of critical commodities, legislatures could permit modest price increases with the balance of any necessary price hikes being absorbed by government subsidies. A second option to discourage unwarranted price hikes could be through tax breaks to cooperative companies post-disaster. No matter what, prices cannot rise to such brutal heights during times of dire need.
As we have seen in the aftermath of Harvey, natural disasters can bring out the best in people, as stories are recounted of everyday neighbors becoming heroes through their unselfish giving — often to total strangers — in times of need. It is nothing short of disgusting to see our neighbors who may be in harm’s way being taken advantage of by opportunistic businesses.
The views expressed in this column are those of the author and not necessarily those of The Observer.