Can Gas Prices Be Saintly? The Asymmetry of Moral Judgment

Here’s a question about ethical asymmetry.

I’m in Ottawa right now. Gas prices here this fall reached over $1.40/litre (about $5.30 a gallon). When prices reach such heights, people scream “Price gouging!” They’re typically wrong, of course: the gas industry in general is highly competitive, and (OPEC aside) price-fixing between the major players is pretty unlikely. The right explanation generally is that — for whatever reasons — various parties (consumers & middle-men) are simply bidding up the price. It sucks for consumers, but it’s not price-fixing.

But here’s a different approach to charges of gas-price gouging: let’s ask, where’s the flip side of that coin? Today, gas here in Ottawa costs about $0.68/litre (about $2.57 a gallon). Retailers are practically giving the stuff away (compared to prices back in September). If high prices are evil, shouldn’t low prices be saintly? Where’s the praise for retailers engaging in, well, whatever the moral opposite of price-gouging is?

If people are willing to assume that high prices = gouging, why aren’t they willing to assume that low prices = charity? Is the assumption that the lowest price is somehow the right price? After all, why offer praise for selling gas at the right price? If that’s the assumption, on what basis are folks out there deciding what the right, morally neutral, price is?

2 comments so far

  1. Matt Zwolinski on

    Interesting question, Chris. I think you’re right that there’s some kind of asymmetry at work here. I think that asymmetry is also discernable in labor wages. Wages are, after all, a kind of price. But one never hears charges of price gouging when labor rates are driven up either by unions or, to better maintain the paralell with “real” price gouging, in the wake of a disaster. Wages for a number of jobs the wake of Katrina, for instance, skyrocketed. But no complaints about that.So I wonder if these two kinds of asymmetry have a common cause, and if so what that is? One possibility is a kind of anti-business bias: when businesses profit, it’s exploitation, when labor or consumers profit, it’s social justice. I imagine there’s probably at least a grain of truth to that hypothesis, but maybe there’s something more to it? Perhaps the thought is that when businesses reap unusually large profit, it’s due to some form of monopoly power or other market failure, whereas no similar kind of failure can be held responsible for low prices? Even if that claim turns out to be empirically dubious, it might nonetheless be widely believed, and responsible for the asymmetry in people’s judgements.

  2. […] that that’s asking for a quantum leap in economic and financial literacy. (Ever notice that no one ever compliments gas companies or stations when their prices happen to be relatively low? This suggests that people think the low […]

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