Mike Stewart/AP Photo
People wait to buy groceries as they stand in line outside an Ingles grocery store in the aftermath of Hurricane Helene, September 30, 2024, in Asheville, North Carolina.
Hurricane Milton, the Category 5 hurricane scheduled to barrel into Florida early tomorrow, may have tilted just far enough to the south to avoid a direct hit on Tampa Bay, which would have been catastrophic. But the danger remains sufficiently clear and present to trigger mandatory evacuations in more than 50 counties, where damage is likely to be widespread. Plus, it comes just two weeks after the deadly force of Hurricane Helene; some areas will see uncleared debris from Helene scattered again by Milton.
The other common thread in the aftermath of Helene, and the prelude to Milton, is allegations of price-gouging. In western North Carolina, there have been 196 reports of spiking prices for fuel, groceries, hotels, and water, according to the attorney general’s office. South Carolina and Georgia are also receiving complaints. Florida has 160 ongoing investigations after Helene, and the state has reopened its public hotline for Milton. Already, Florida residents have expressed frustration over airfares climbing allegedly tenfold during the evacuation period. (Air travel can’t be investigated by the states; it’s the jurisdiction of the Department of Transportation, which is looking into the situation.)
It turns out that price-gouging has been a headline issue in the presidential race. When Kamala Harris suggested a federal law preventing price-gouging for groceries, she was met with virulent scorn, not only from her Republican rivals but from economists who immediately imagined her to be proposing a central price-setting authority. That was not the case, as the Harris campaign clarified; the proposal was not about price controls.
Harris herself has now come out and warned against price-gouging amid the storms. “Americans impacted by a crisis should never be ripped off,” Harris said in a statement from her vice-presidential office. “Those evacuating before Hurricane Milton or recovering from Hurricane Helene should not be subject to illegal price gouging or fraud—at the pump, airport, or hotel counter. Any company or individual that tries to exploit Americans in an emergency should know that the Administration is monitoring for allegations of fraud and price gouging and will hold those taking advantage of the situation accountable.”
The situation with the Southeast hurricanes offers powerful testimony for why laws against price-gouging matter, to protect vulnerable customers from being ripped off by opaque scheming or exploited in a desperate situation. This has not been enough, however, to change the minds of the same economists who condemned Harris’s plan when she released it.
Both North Carolina and Florida have laws against price-gouging during a state of emergency. These do not prohibit price increases generally; they mean to prevent unreasonable, unfair, and deceptive price spikes without some cost justification, usually on particular types of goods, and often above a specific level (typically 10 to 15 percent) relative to the average price, for example over the previous 30 days.
In moments of crisis, merely allowing markets to work is typically seen by the public as morally abhorrent, with negative impacts for social cohesion.
There is no federal price-gouging law, which leaves the protections of victims at the whim of the varying laws and enforcement of the states. Whether North Carolina’s attorney general (and Democratic gubernatorial candidate) Josh Stein and Florida’s Republican attorney general Ashley Moody will uphold the law uniformly is highly unlikely.
In addition, there are federal emergencies like the coronavirus pandemic that state price-gouging laws may not be able to capture; the Federal Trade Commission issued a report on large grocers demanding that suppliers deliver wholesale goods to them before independent competitors, leading to massive shortages at those outlets. The large grocers, meanwhile, were able to charge more and earn higher profits because they were the only source for several items. It is likely for this reason that Harris focused on groceries in her anti-price-gouging plan.
The public has generally been quite supportive of the government stepping in to prevent gouging. And in the airfare context, federal action appears to have helped; after President Biden warned against price-gouging, some airlines said they capped their fares. But the bully pulpit can only go so far, which is why advocates are using the hurricane to argue for the necessity of a federal ban.
“Despite pushback from corporate talking heads, price-gouging is a real issue, and we support Kamala Harris in her commitment to lowering costs and protecting Americans from predatory practices,” said the Progressive Change Campaign Committee and its government affairs arm P Street, in a joint statement. The two organizations noted that a recent poll showed 72 percent support for a federal law against price-gouging.
But economists reached by the Prospect, who previously recoiled at the notion of any government intervention in pricing, remained skeptical in the wake of the news reports in the aftermath of the hurricanes. “I genuinely am unsure about whether price-gouging laws in extreme emergencies make the problem better or worse,” said Jason Furman, the Harvard economist who had attacked the Harris proposal when she made it. He added that “high-quality research” was lacking.
“There is good reason to think that laws could be helpful in curbing abuses of monopoly power and also good reasons to think that by blunting price signals it will result in less much-needed food and other supplies going to disaster areas,” Furman said. Though he was OK with state anti-gouging laws in emergencies, he questioned the value of a federal law.
Weber State economist Gavin Roberts, who headlined a CNN piece castigating the Harris plan, began his response to the Prospect by providing a dictionary definition of price controls, and then claiming that state-level price-gouging laws “clearly meet this definition.” While he said that he doesn’t disfavor government intervention to reduce costs on victims of emergencies, Roberts said, “I think there are much better interventions than price-gouging bans … like subsidizing firms or individuals for offering goods or services that would promote the evacuation effort, e.g., helping clear roads,” which would make resources more abundant.
Implicit in these answers is that government price-setting of any kind automatically leads to scarcity and interferes with the natural order of markets. Price mechanisms, of course, are human creations, prone to human manipulation and opportunism. And in moments of crisis, merely allowing markets to work is typically seen by the public as morally abhorrent, with negative impacts for social cohesion. That explains the surfeit of state price-gouging bans.
The idea that only price signals can solve allocation problems is assumed but not proven, and impossible in some cases. Hundreds of airplanes will not come streaming into Tampa airport during the narrow window it can remain open because United charged a couple thousand bucks for a ticket. Sometimes profit-taking is just that, and has no other application or motive.
There are other methods to ensure people trapped in or around hurricane zones can get what they need: pre-positioning aid, air-dropping supplies, opening shelters, or even soliciting private-sector assistance. Dangling the lure of profit isn’t the only option.
The Harris proposal gets at the fact that a world with more frequent extreme weather, more global outbreaks, and more geopolitical strife is bound to play havoc on supply chains and give businesses with sufficient market power an opening to turn emergency into opportunity. The back-to-back hurricanes offer a glimpse into this world in miniature.
