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September 13, 1999

Press Release Draws Response

The following is a copy of a press release distributed by Associated Industries of Florida at the onset of Hurricane Floyd, a recipient's response to that release, and finally a follow-up to the responder by Mr. Jon L. Shebel, President & Chief Executive Officer of Associated Industries of Florida.


"Price Gouging is Illegal" Press Release

As Hurricane Floyd approaches the southern part of Florida, there have already been reports of "price gouging" by some businesses. Associated Industries of Florida (AIF) reminds businesses that it is illegal in Florida to increase prices above the normal price level in times of impending disaster or after disaster strikes. In other words, as the hurricane approaches Florida, all businesses should retain their present prices on all items. After the hurricane has passed, if there is major and significant destruction in various areas of the state, the businesses in those areas should continue their normal pricing which was in effect prior to the hurricane and should not increase those prices.

In the aftermath of Hurricane Andrew in south Florida, the office of the Attorney General was very active in charging businesses with price gouging. "If the office of the Attorney General charges your business with such violations, it will be financially costly, an embarrassment to your business, and could affect the standing of your business in the community," said Jon L. Shebel, AIF president & CEO. "This is one of those situations where the 'law of supply and demand' does not apply.  For the sake of your business and its standing in the community, we urge you not to increase your prices before or immediately after the passage of Hurricane Floyd."

Associated Industries is a statewide employers association representing more than 13,000 businesses who collectively employ more than 1 million people. Member companies range from large multinational corporations to small family-owned enterprises. AIF is commonly known as "The Voice of Florida Business."


Response to AIF Press Release by Mr. Travis Kidd

I am not a resident of Florida, nor am I a business owner, but I wanted to take issue with AIF's press release regarding "price gouging." The press release states that this is one of those situations where the law of supply and demand does not apply. The law of supply and demand ALWAYS applies.

If a business is not allowed to raise prices in times of high demand, a shortage will result. And then there will be less of the product to sell, meaning that critical supplies of the product will not make it to those who need it most. But besides that, it is simply silly to make "price gouging" (the term is appropriately place in quotes, as it is a misnomer, implying something malicious) illegal. If someone is willing to pay $3 for a gallon of gas, then that means he would rather have the gallon of gas in his car than the $3 in his wallet. Therefore, if I provide him the gallon of gas at a cost of $3, I have made a trade that is beneficial to him. Why then should it be illegal to sell the gas for $3 a gallon? Making this illegal smacks of socialism.

I am guessing that it would not be illegal in Florida for me to simply refuse to sell gas at all during times of disaster. Would that be more or less beneficial to the man who needs the gas to take his family to safety?  I  would think that AIF would argue "for," not against the right of businesses to sell their products for whatever the law of supply and demand (which ALWAYS applies) dictates that such products are worth.



Response to Mr. Kidd by Mr. Shebel

To: Travis Kidd,

Thank you for your memo regarding "price gouging." It is obvious that you have never been involved in public policy decision making during a time of disaster. Budweiser puts water in been cans, transports it to the disaster area in their trucks, at their expense and gives it away. Publix and Winn-Dixie send truckloads of ice and pampers and gives them away. Florida Power and Light and Bell South send trucks and crews from Florida to Georgia, South Carolina, and North Carolina to restore utility services. Oil companies transport additional motor fuel to the area and sells it at the same price as before the disaster. Georgia Pacific sends additional plywood to the area and sells it for thirty days at the same prices as before the disaster, even though a worldwide price increase had gone in the day before the disaster hit.

A young man struggling to make ends meet as a construction worker, leaves his home in Florida in his pickup truck, full of his tools and drives to Charleston, South Carolina to help citizens make their homes livable after Hurricane Hugo. This young man, my son, would take no compensation for his services and even used his own limited funds to buy plywood to patch up people's homes. I am very proud to be associated with businesses such as I have described above, who realize that during a time of disaster, the law of supply and demand takes a back seat to taking care of our fellow human beings.

You stated you are not a business owner and I must tell you this is quite obvious to me. If you were a business owner, you would understand that customers are the key to success in business. If your customers ever feel you have gouged them, then they will be gone and you will be out of business. Hence, the Law of Supply and Demand does not always apply.  Customer relations always applies!!!!

Jon L. Shebel
President & Chief Executive Officer
Associated Industries of Florida