Gouging Marathon
Kentucky Progress has been boiling down the Stumbo v. Marathan Oil v. Fletcher/Stumbo issue. The national Club for Growth then added a bit to the story.
Here's the gist:
- Stumbo sues Marathon Oil for "price gouging," which is code for "trying to make as much money as you can with as little effort as possible."
- Marathon responds by suing Stumbo and Fletcher in an attempt to invalidate Kentucky's price gouging law.
- Fletcher and Stumbo immediately begin singing from the same hymnal, decrying "gougers." Fletcher, for his part said that his "executive order stands and it has the full force of law," which is essentially the same as saying, "The emergencies created by hurricanes Katrina and Rita are still in effect."
Here's the problem. Price gouging is always a short-run phenomenon in a competitive market economy. Every entrepreneur wants to gouge. Luckily, there's almost always another entrepreneur willing to gouge you less. Then, invariably, someone shows up with a new way to do the job very cheaply, basically killing the profit margins of the other two guys. But without the possibility of being able to make a HUGE profit, would the first guy even have jumped into the market?
