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Natural Disaster? Price Gouging Is Rational

| September 25, 2017
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This may be a shocking statement, but "price gouging" is a rational response to the rapidly increased demand for goods with little chance of short-term resupply. Executed properly, "price gouging", or as I prefer to call it, "dynamic re-pricing in the face of a rapidly changing supply demand imbalance," allows more people access to scarce resources. Granted, each consumer may receive fewer goods than desired and at a higher price. Sharing limited resources across more consumers (families) can actually facilitate a more orderly evacuation of a pending disaster area.

Let's go through a quick example. In many cases, the evacuation area may be a hundred miles wide (a coastline) but only ten to twenty miles deep. To escape danger, the evacuees only have to travel fifty miles at most, although further may be desired to access better temporary housing and other amenities.

Let's assume a gas station maintains a regular inventory of 5,000 gallons of gasoline to meet normal demand. Assuming each evacuating family needs 20 gallons of gas (which would provide them with 400 miles of range on average), that gas station could provide full tanks of gas to 250 families. However, if the gas station imposed some type of rationing, either through purchase limits (say 5 gallons or 100 miles of range on average) or dynamic re-pricing ($5 per gallon), or a combination, that same station could provide partial tanks of gas to allow 1,000 families to evacuate the danger zone. As a casual reminder, 1,000 > 250.

What is the best way to protect yourself and your family from "dynamic re-pricing in the face of a rapidly changing supply demand imbalance?" Follow the Boy Scout Motto: Be Prepared! There are plenty of web sites, blogs, magazines, books, and other how to guides available. Check out Practical Prepping: No Apocalypse Required by my Naval Academy classmate Steven Konkoly.

The main items to have on hand in an evacuation situation, in my opinion:

- cash (credit cards are useless with no power)

- gasoline (can't move without it)

- water (more than you think you need)

- non-perishable food (power bars and the like for compact energy)

- communication devices (hand held radios to supplement cell phones, which may not work)

- method to charge devices or recharge batteries or extra batteries

- self-defense weapons (don't shirk, the bad guys will have them, so you should, too)

- extra clothes and shoes in case the evacuation takes extended time

- and my favorite, ignored by many, rugged bicycles for quick egress when roads become jammed

Safe evacuations!

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