Al's Rantings

A view of the world from a hillbilly perspective.

Location: Virginia

I was born and went to school in the heart of the Appalachian mountains, in southern West Virginia. After graduating from college, I got married, and began working in Bristol, TN. I have have various jobs from Tennessee to up state New York and a few points between. Now I work in West Virginia. Some day, I want to live in Alaska.

Wednesday, April 26, 2006

Price Gouging

When you say price gouging, we normally think about gasoline since it has been in the news so much. Under Virginia law (link):

Under a stronger state law that takes effect July 1, the governor and state can move against suppliers who charge "such an unconscionable price" that it creates panic and threatens public welfare.

Well heck, this is so vague anyone could apply it to anything. Who determines if the price is unconscionable? How many people does it take to cause a public panic? I guess the all-knowing government know the answers.

What about a couple of instances I consider price gouging.

1. Soda pop, aka pop. I have noticed that the price of a 20 ounce bottle of pop runs about $1.29. This is a little over half a liter. And a 2 liter bottle runs about $1.49. In my opinion, I am being gouged on the 20 ounce bottle because it is convenient. Plus, companies are switching from 20 ounces to 1/2 liter bottles. Since 1/2 liter is less than 20 ounces, the price should be lower...WRONG...the price stays the same. Therefore, I see an increase in the unit price. This is pretty slick of the pop companies. Same price, less product. Is it Gouging? I my opinion...YES! Is it unconscionable to change the package size and keep the price the same? In my opinion...YES!

2. Potato chips. Since a 50 pound bag of potatoes cost about $5, why does a big bag of Ruffles cost around $5? And I know they can sell for less, because sometimes they go on sale. Slice the potatoes, fry them in oil, and package. It ain't rocket science. But they sure are expensive.

Everyone want to jump on the gas price gouging band wagon. Some make statements for the shock value. People in Congress should know better. Instead of profit, they should talk about profit margin. Plus, I read that gas companies make about 9 cents per gallon. The government takes 20-30 cents per gallon depending on where you live. If the gas companies are gouging the public, just what is the government doing to us?


Blogger John said...

Sadly, most people don't understand commodity pricing. If a price goes, down, it should stay down forever. End of story. If a price fluctuates, then obviously someone is getting "gouged." What people miss is the profit is usually reinvested in additional capacity to bring the price commodity down via the economic, versus the political means. Also, people miss that the price is set by the marginal consumer, not by the average consumer. If gas prices go up, I bike, I walk, I ride a bus, I avoid driving so that the additional gallon of gas can go to someone who values it more than I.

What makes people feel a right to a set (low) price on things?

I think it's Pez. Pez is always cheap, and I think it costs less now than when I was a kid.

Stupid Pez.

12:09 AM  
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