Ron Paul: Abolish all Price Controls – Let the Free Market Function!

by Ron Paul

As the northeastern United States continues to recover from Hurricane Sandy, we hear the usual outcry against individuals and companies who dare to charge market prices for goods such as gasoline. The normal market response of rising prices in the wake of a natural disaster and resulting supply disruptions is redefined as “price gouging.” The government claims that price gouging is the charging of ruinous or exploitative prices for goods in short supply in the wake of a disaster and is a heinous crime. But does this reflect economic reality, or merely political posturing to capitalize on raw emotions?

In the wake of Hurricane Sandy, the supply of gasoline was greatly disrupted. Many gas stations were unable to pump gas due to a lack of electricity, thus greatly reducing the supply.  At the same time demand for gasoline spiked due to the widespread use of generators. Because gas stations were forbidden from raising their prices to meet the increased demand, miles-long lines developed and stations were forced to start limiting the amount of gasoline that individuals could purchase. New Jersey gas stations began to look like Soviet grocery stores.

Had gas stations been allowed to raise their prices to reflect the increased demand for gasoline, only those most in need of gasoline would have purchased gas, while everyone would have economized on their existing supply. But because prices remained lower than they should have been, no one sought to conserve gas.  Low prices signaled that gas was in abundant supply, while reality was exactly the opposite, and only those fortunate enough to be at the front of gas lines were able to purchase gas before it sold out.  Not surprisingly, a thriving black market developed, with gas offered for up to $20 per gallon.

With price controls in effect, supply shortages were exacerbated.  If prices had been allowed to increase to market levels, the profit opportunity would have brought in new supplies from outside the region.  As supplies increased, prices gradually would have decreased as supply and demand returned to equilibrium. But with price controls in effect, what company would want to deal with the hassle of shipping gas to a disaster-stricken area with downed power lines and flooded highways when the same profit could be made elsewhere?  So instead of gas shipments flooding into the disaster zones, what little gas supply is left is rapidly sold and consumed.

Governments fail to understand that prices are not just random numbers. Prices perform an important role in providing information, coordinating supply and demand, and enabling economic calculation. When government interferes with the price mechanism, economic calamity ensues. Price controls on gasoline led to the infamous gas lines of the 1970s, yet politicians today repeat those same failed mistakes. Instituting price caps at a below-market price will always lead to shortages. No act of any legislature can reverse the laws of supply and demand.

History shows us that the quickest path to economic recovery is to abolish all price controls. If governments really want to aid recovery, they would abolish their “price-gouging” legislation and allow the free market to function.


  • He never won Florida, he won Nevada, Minnesota, Lousiana, and othe states the GOP cheated him out of though

  • Why are you still listening?

  • LOL. This guy is the single most brave, right, and honest humans in modern history, he’s a legend and a champion, GTFO troll.

  • Why is this gutless, loser still talking?

    • Libertarian777

      i dunno, why are you still talking?

  • Not of this video. The message here is about problems of government price fixing.

  • Sounds like you actually do agree with it, you’re willing to let another person that needs the gas more have your share and pay the premium price for it. You’re willing to wait a little longer and conserve what you already have untill the price comes back down.

  • “nobody knows nothing about”

    do you even realize what you just said?

  • If 50 dollars is too much for a gallon of gas for your generator,you are free to not buy it.

  • Cant say i agree with this. I get the idea and it makes sense to leave it to the free market but id rather wait a little longer and pay less for gas

  • a word from the good doctor is always refreashing!

  • he won minnesota and nevada as well two states that woulda definently been in play with a Paul canidancy

  • I know if it was me that paid $50 for a gallon of gas, I’d be happy as heck. Happy that guy didn’t sell his gallon of gas to the first 50 people that asked but refused to pay more than $5, thus allowing for me to buy it as I obviously wanted it more. Only thing worse than overpaying, is not being able to buy at all.

  • how was it a free market if there was government interference with the gas stations in the first place……

  • You’re on the right track at least. You recognize the major cause of the problem, government involvement. This is good, your details miss though and the devil is in the details. See Stefan Molyneux’s video about sugar. “How the government makes you fat” or some such thing.

  • Economically ignorant. I go to the store to buy bread. I don’t know how long it’ll be before I get more so I take the last 4 loaves. I get to the counter it is $7/loaf instead of $3. I decide at that price I only need two leaving two for the guy behind me. You want to tell me I’m cruel but it is you that would have the guy behind me starve. Like I said, economically ignorant.

    Oh, not to mention high prices drive more supply into the area allowing the problem to be fixed faster.

  • Corporate Price fixing is not good. That is the message.

  • So that means somebody knows something? Careful with your double negatives, they change the meaning of what you say.

  • now THAT is a concept i can wrap myself around. where can i find this country? I want to move there haha

  • I’d like to know, where in the Constitution does it say the government should administer the price of a service or good? Can somebody please point that out to me?

  • Ron Paul is the most knowledgeable and honest politician I think I’d ever find. Not to mention everything he says just makes SENSE. God bless you Ron! =)