Consumers Accuse Businesses of Price Gouging during Harvey

September 5, 2017

marshall-astorSince Hurricane Harvey made landfall in Texas a couple of weeks ago, the region has been hit with devastating floods that have upended the lives of millions. And although the waters are finally starting to recede in cities like Houston, that just means the serious cleanup work is about to begin. The financial forecasting firm Moody’s Analytics now estimates that Harvey inflicted as much as $108 billion in damage to the region. Thankfully, dedicated volunteers have been working around the clock to help communities recover after this disaster. Many organizations are still looking for donations, too. (Click here for a list of places you can give to.)

Unfortunately, not everyone responded to the storm with the same level of compassion and commitment. During the worst of the flooding, the Texas Attorney General’s office received more than 650 complaints from consumers about price-gouging at various stores. One report claimed that a gas station had been selling fuel for $20 a gallon while another business allegedly sold bottles of water for $99 per case. Even Best Buy caught the ire of the Internet after a viral photo showed one location offering cases of water for $42 apiece. “These are things you can’t do in Texas,” said the state’s attorney general Ken Paxton. “There are significant penalties if you price-gouge in a crisis like this.”

Anyone found guilty of price-gouging can face a fine reaching up to $20,000 per incident. In fact, that figure can climb ten-times higher if the victims are 65 or older. In order to avoid any potential punishment, Best Buy apologized for the water bottle incident and placed the blame on the employees of that single store. Some gas stations could have a decent defense as well since the flooding shut down several oil refineries in the area. With supplies low, it’s possible that fuel providers had justification to double prices from an average of $1.30 per gallon to $3.50 in some areas. Still, one business that can’t defend its practices is the Best Western hotel in Robstown, Texas. During the hurricane guests spent up to $320 on a room, nearly three times the normal rate. Best Western’s corporate office then told the media that all guests had been reimbursed and that the chain had started to sever its ties with the Robstown location.

Questions:

  1. Why do some business drive up their prices during times of crisis?
  2. Do you think gas stations that charged $3.50 per gallon were justified to do so as local oil supplies began to dwindle?

Sources: Kristine Phillips and Hamza Shaban, “A $99 Case of Bottled Water? Texas Stores Accused of Price-Gouging in Wake of Harvey,” The Washington Post, August 30, 2017; Don Lee, “Harvey Is Likely to Be the Second-Most Costly Natural Disaster in U.S. History,” Los Angeles Times, September 1, 2017. Photo by Marshall Astor.

11 Responses to Consumers Accuse Businesses of Price Gouging during Harvey

  • I feel like prices go up more during times of crisis because people are rushing and they don’t think about how much they are spending. Most likely they are desperate to get out of the location where crisis hits. Like if a tornado was bound to hit a certain town, the citizens would want to get out of that town as quickly as possible. They would fill their car tanks with gas even though it would be a dollar higher. They dot care because they are more concerned about their life.
    I do not think gas stations are justified to charge 3.50 a gallon because in my opinion gas prices that hit the $4 mark is just way too expensive. Gas prices would be more convenient if they were to stay at the $3 mark no higher and yes lower.

  • 1. Most businesses raise their prices during a crisis because supplies are limited and the demand for produces are great. Usually, during a crisis it is difficult to get supplies into hazard areas, and not all delivery personnel are willing to go into a disaster zone. Therefore, delivery company charge more for merchandise and shipping, leaving the businesses to up their prices to pay for the overhead and make a profit.

    2. In the case where gas stations are charging $3.50, because oil supplies began to decrease I feel they are justified not cause people will pay, but because supplies are scares and the demand for oil is huge.

  • Eulalia Guerrero
    BUS 20
    Professor Cardiel
    18 February 2018

    Consumers Accuse Businesses of Price Gauging during Harvey

    1.Why do some business drive up their prices during times of crisis?
    ANSWER: They drive up the prices because they want to make money. Also because its hard for them to get more products because of the disaster.

    2.Do you think gas stations that charged $3.50 per gallon were justified to do so as local oil supplies began to dwindle?
    ANSWER: Yes I think gas stations were justified to do so because the flooding shut down a lot of oil refineries and they were low on supply.

  • 1.) It’s because its in use for higher demand which means during the crisis more people are going to need the products.
    2.) I believe gas stations did the right thing to charge more because oil is expensive and if the price of oil drops it gets worse for economy.

  • Jairo Gijon
    BUS 20
    Professor: Cardiel
    19 February 2018

    Consumers Accuse Businesses of Price Gouging During Harvey

    1. Why do some businesses drive up their prices during time of crisis?

    ANSWER: During times of crisis some businesses up their prices because the demand is so high and the supply is very limited do to damages caused to the product. Other businesses also up their prices to make more profit which is illegal in some states such as Texas, especially if you are doing so to elders of the age 65 and over.

    2. Do you think gas stations that charged $3.50 per gallon were justified to do as local oil supplies began to dwindle?

    ANSWER: Yes, the gas stations were justified to double their prices on gas because the oil supplies were very limited. The decrease of supplies and the increase in demand caused a dramatic increase in the price for the supplies.

  • Jennifer Nguyen
    BUS 20
    Professor Cardiel
    Consumers Accuse Businesses of Price Gauging during Harvey

    1. Why do some business drive up their prices during times of crisis?
    I can only think of two reasons why some businesses drive up their prices during times of crisis. The first is to take advantage of the shortage of supplies to charge higher prices and thus gain more profit from their goods and services. The second reason is because of logistics. When natural disasters happen, infrastructures tend to get damage. This makes the delivery of supplies to disaster areas difficult, dangerous, and expensive. These cost adds up for the businesses, and to cover for the increase in cost to get these supplies, businesses are need to charge consumers more.

    2.Do you think gas stations that charged $3.50 per gallon were justified to do so as local oil supplies began to dwindle?
    Yes, I do think that the gas stations were justified in doubling the price per gallon. Supplies for this product was low and to acquire more of this product would cost the owners more money than usual because of logistical cost and increase prices from suppliers – among other reasons.

  • Ryan Williams
    BUS 20
    Professor Cardiel
    19 February 2018

    “Consumers Accuse Businesses of Price Gouging during Harvey”
    1. Why do some businesses drive up their prices during times of crisis?
    Answer:
    Some businesses drive up their prices for products during times of crisis because the businesses know that people or rather, consumers will be more desperate to buy necessities such as food, water and shelter because the world has fallen apart around them and there is nowhere else to turn. On a regular non-catastrophic day, if a businesses were to price gouge, they would be unsuccessful because the consumers would just take their business (money) elsewhere. The consumers usually have the ability to make that option; however, when a hurricane hits, it’s almost as if the businesses that survived the hurricane and prevailed have a sort of monopoly over their goods and services because there is less competition and the consumers no longer have the option of taking their business elsewhere.
    2. Do you think gas stations that charged $3.50 per gallon were justified to do so as local oil supplies began to dwindle?
    Answer:
    Gas stations were justified to charge $3.50 per gallon as local oil supplies began to dwindle because there is now more risk involved in acquiring gasoline for communities. In order for local gas stations to acquire more gas, the gas must be imported from elsewhere, further away, which costs more money than using local oil refineries. Also, the trek to carry the gasoline across the state of Texas may be more hazardous in certain areas than if there were not a hurricane, which means there may need to be more compensation for non-local refineries in order to create incentive for taking the job on because they know there is risk involved. So unless there is a cheaper process to get gas and that is ostensible to the consumers, then the gas stations are doing their best to respond to consumers’ demand by properly pricing their product in accordance to the environment.

  • Araceli Arribeno
    BUS 20
    Professor Cardiel
    19 February 2018

    Consumers Accuse Businesses of Price Gouging during Harvey

    Question 1: Why do some business drive up their prices during times of crises?

    ANSWER: It is very common businesses up their prices during times of crises because they know people will lack in supplies such as food, drinks, or any supplies people will need to survive during the event. Since it will be in high demand, as a business owner you’ll still want to make as much money as possible this will give them a lot of profit.

    Question 2: Do you think gas stations that charged $3.50 per gallon were justified to do so as local oil supplies began to dwindle?

    ANSWER: Yes, the gas stations that charged $3.50 per gallon were justified, because supplies were very limited and if people really need gas they will be more then willing to pay for it. Even though it’s not very beneficial for several people that are in need, but business will always look for ways to make money.

  • Question 1:
    I believe that businesses drive up their prices during times of crisis because there is little of that one thing, in a crisis a lot of times many companies at damaged or destroyed that there is one store that sells what you need, so the store jacks up there prices. Also during a crisis people don’t think about the price of something they grab what they need and leave.
    Question 2:
    I believe that it is justifiable, any person that was making that money would do the same, with al the oil gone it is justifiable for a gas station to jack up there prices because there are little of that supply.

  • Araceli Arribeno
    Bus 20
    Professor Cardiel
    19 February 2018

    Consumers Accuse Business of Price Gouging During Harvey

    Question: why do some business drive up their prices during times of crises?

    ANSWER: it is very common businesses up their prices during times of crises, because they know people will lack in supplies such as food, drinks, or any supplies people will need to survive during the event. Since it will be in high demand, as a business owner you’ll still want to make as much money as possible this will give them a lot of profit.

    Question 2: Do you think gas stations that charged $3.50 per gallon were justified to do so as local oil supplies began to dwindle?

    ANSWER: Yes, the gas stations that charged $3.50 per gallon were justified, because supplies were very limited and if people really need gas they will be more then willing to pay for it. Even though it’s not very beneficial for several people that are in need of supplies or gas, but business will always look for ways to make money.

  • Aaron Barraza
    BUS 20
    Professor Cardiel
    19 February 2018

    1.Why do some business drive up their prices during times of crisis?
    ANSWER: When there is a crisis, resources become more scare, therefore their demand increases as well. Businesses may be raising prices for two reasons, an attempt to generate similar profits to those in normal conditions, or they genuinely may simply seek to raise prices according to demand.

    2.Do you think gas stations that charged $3.50 per gallon were justified to do so as local oil supplies began to dwindle?
    ANSWER: I do not think they were justified because raising prices was not going to help any of those who were in need, and gas was not being used for leisure sake but survival. To be motivated by profit in a time of crisis is advantageous.

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