A Kind Word for Gouging

Despite comments to the contrary, there is no danger that U.S. motorists will buy more gasoline than there is. There will be no gap at all between purchases and sales. The question instead concerns which technique should be used to bring supply and demand into balance. There are only three possibilities: “first come, first served” (the waiting line), political preference, or the price system.

Use of the waiting line makes sense only if we assume that time has no value. With waiting time of up to three hours reported for California, even a low value on time of five dollars an hour is enough to double the real price of 15 gallons.

About the Author

Alan Reynolds

Alan Reynolds, National Review’s economics editor from 1972 to 1976, is a senior fellow at the Cato Institute and the author of Income and Wealth.

Despite comments to the contrary, there is no danger that U.S. motorists will buy more gasoline than there is. There will be no gap at all between purchases and sales. The question instead concerns which technique should be used to bring supply and demand into balance. There are only three possibilities: “first come, first served” (the waiting line), political preference, or the price system.

Use of the waiting line makes sense only if we assume that time has no value. With waiting time of up to three hours reported for California, even a low value on time of five dollars an hour is enough to double the real price of 15 gallons.