"PRICE GOUGING IS ILLEGAL"
Press Release Draws Response
Source: Associated Industries of Florida
Tallahassee, Florida
September 13, 1999
The following is a copy of a press release distributed
by Associated Industries of Florida at the onset of Hurricane Floyd,
a recipient's response to that release, and finally a follow-up
to the responder by Mr. Jon L. Shebel, President & Chief Executive
Officer of Associated Industries of Florida.
"Price Gouging is Illegal"
Press Release
As Hurricane Floyd approaches the southern part of Florida, there have already been
reports of "price gouging" by some businesses. Associated Industries of Florida
(AIF) reminds businesses that it is illegal in Florida to increase prices above the normal
price level in times of impending disaster or after disaster strikes. In other words, as
the hurricane approaches Florida, all businesses should retain their present prices on all
items. After the hurricane has passed, if there is major and significant destruction in
various areas of the state, the businesses in those areas should continue their normal
pricing which was in effect prior to the hurricane and should not increase those prices.
In the aftermath of Hurricane Andrew in south Florida, the office of the Attorney
General was very active in charging businesses with price gouging. "If the office of
the Attorney General charges your business with such violations, it will be financially
costly, an embarrassment to your business, and could affect the standing of your business
in the community," said Jon L. Shebel, AIF president & CEO. "This is one of
those situations where the 'law of supply and demand' does not apply. For the sake
of your business and its standing in the community, we urge you not to increase your
prices before or immediately after the passage of Hurricane Floyd."
Associated Industries is a statewide employers association representing more than
13,000 businesses who collectively employ more than 1 million people. Member companies
range from large multinational corporations to small family-owned enterprises. AIF is
commonly known as "The Voice of Florida Business."
#####
Response to AIF Press Release
by Mr. Travis Kidd
I am not a resident of Florida, nor am I a business owner, but I wanted to take issue
with AIF's press release regarding "price gouging." The press release states
that this is one of those situations where the law of supply and demand does not apply.
The law of supply and demand ALWAYS applies.
If a business is not allowed to raise prices in times of high demand, a shortage will
result. And then there will be less of the product to sell, meaning that critical supplies
of the product will not make it to those who need it most. But besides that, it is simply
silly to make "price gouging" (the term is appropriately place in quotes, as it
is a misnomer, implying something malicious) illegal. If someone is willing to pay $3 for
a gallon of gas, then that means he would rather have the gallon of gas in his car than
the $3 in his wallet. Therefore, if I provide him the gallon of gas at a cost of $3, I
have made a trade that is beneficial to him. Why then should it be illegal to sell the gas
for $3 a gallon? Making this illegal smacks of socialism.
I am guessing that it would not be illegal in Florida for me to simply refuse to sell
gas at all during times of disaster. Would that be more or less beneficial to the man who
needs the gas to take his family to safety? I would think that AIF would argue
"for," not against the right of businesses to sell their products for whatever
the law of supply and demand (which ALWAYS applies) dictates that such products are worth.
#####
Response
to Mr. Kidd by Mr. Shebel
To: Travis Kidd,
Thank you for your memo regarding "price gouging." It is obvious that you
have never been involved in public policy decision making during a time of disaster.
Budweiser puts water in been cans, transports it to the disaster area in their trucks, at
their expense and gives it away. Publix and Winn-Dixie send truckloads of ice and pampers
and gives them away. Florida Power and Light and Bell South send trucks and crews from
Florida to Georgia, South Carolina, and North Carolina to restore utility services. Oil
companies transport additional motor fuel to the area and sells it at the same price as
before the disaster. Georgia Pacific sends additional plywood to the area and sells it for
thirty days at the same prices as before the disaster, even though a worldwide price
increase had gone in the day before the disaster hit.
A young man struggling to make ends meet as a construction worker, leaves his home in
Florida in his pickup truck, full of his tools and drives to Charleston, South Carolina to
help citizens make their homes livable after Hurricane Hugo. This young man, my son, would
take no compensation for his services and even used his own limited funds to buy plywood
to patch up people's homes. I am very proud to be associated with businesses such as I
have described above, who realize that during a time of disaster, the law of supply and
demand takes a back seat to taking care of our fellow human beings.
You stated you are not a business owner and I must tell you this is quite obvious to
me. If you were a business owner, you would understand that customers are the key to
success in business. If your customers ever feel you have gouged them, then they will be
gone and you will be out of business. Hence, the Law of Supply and Demand does not always
apply. Customer relations always applies!!!!
Jon L. Shebel
President & Chief Executive Officer
Associated Industries of Florida
516 North Adams Street ● Post Office Box 784 ● Tallahassee, Florida 32302-0784 ● Phone: (850) 224-7173 ● Fax: (850) 224-6532 ● www.aif.com
