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Analyze News Article: The Circus Surrounding Price-Gouging Legislation

Date:  2021-05-25 18:41:47
3 pages  (579 words)
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The author of the article, The circus surrounding price-gouging legislation, George Landrith, wants to show that members of congress are the individuals who seem to act with impunity in regard to price-gouging. Landrith alleges that almost every year, members of congress seem to fell outraged and look for scapegoats in the wake of their failed economic policies. The failed policies by congress have made the United States dependent on foreign sources of oil through the creation of political, legal and regulatory climate that is too hostile to refine the countrys oil to the required capacity.

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According to Landrith, the Congress wants to enact legislation that is against price-gouging. The message in this article is that price-gouging would definitely impose de-facto price controls. The market price works through the law of supply and demand. The price that is set in the market is as a result of the willingness of the consumer to purchase the commodities that they need at a particular price. Consumers always have the option of buying less or not buying at all. The article alleges that the supply of gasoline in the United States has been in steady supply without any interruption. The only time that supply was interrupted was during the President Carter regime when price controls were imposed on gasoline. Price controls on gasoline in the United States led to massive shortages and long lines.

For any consumers or governments, the appeal of price control is comprehendible. Price controls may sometimes fail to protect some consumers while at the same time hurting others. Price controls especially price ceilings hold out the promise that it protects some groups that are especially hard pressed to meet certain prices in the market. As an economist, I believe that one should be capital on the impacts of price controls. This is because price controls distort the allocation of resources. Price ceilings, in theory, prevent certain prices from exceeding certain amounts thereby causing shortages. When President Carter allowed for the introduction of price controls especially in the energy industry, there were massive shortages of gasoline and presence of long lines.

If the government imposes price controls on the gasoline industry through price gouging, then there would be a similar impact as that of explicit price controls. If congress moves forward with the proposed legislation, then there would be periodic episodes when there would be excess gasoline and periods when there would be shortages in the availability of gasoline.

If consumers are willing and able to pay for gasoline at higher prices, then it should be left to the market to determine prices. It is up to the congress to ensure that they come up with legislation that outlaws any government gouging. If the prices of gasoline in the market rises, then the producers of gasoline and gasoline products would be motivated to produce more gasoline as they would have more incentives. On the other hand, the incentive that the consumers would have is to conserve the gasoline that they have purchased since the price is high. In economic terms, one of the basics of price controls is that the public rarely seems comprehend it. Politicians on the other hand jump at the suggestion that price controls is good for the public and in many instances seem to find the solutions through price controls as the only remedy. In most instances, they make matters worse.Works cited

Landrith, George. "The circus surrounding price-gouging legislation." Hill 21 June 2007: 28. MasterFILE Premier. Web. 20 Nov. 2016.

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