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You're price-gouging? Thank you very much

Limousine driver David Simonyam fills has automobile with gasoline after waiting on line on East Houston Street in Lower Manhattan following Superstorm Sandy on Nov. 4, 2012 in New York City.

Today, New Jersey's attorney general sued seven gas stations and a hotel for price gouging in the wake of Hurricane Sandy. The defendants are accused of raising prices up to 59 percent. New Jersey has also issued 65 subpoenas. New York's attorney general is investigating gouging as well, including gasoline sales offered on Craigslist.

In one Craigslist case, Steve Pulaski of Queens was traveling in Vermont with his father when Hurricane Sandy hit. Shortly after the storm, his mom called from home.

"She was waiting three hours on the gas line," Pulaski says. "Me and my father, we got a couple 55 gallon barrels, we went to this local gas station and filled them up."

Pulaski drove home, and listed the gasoline for sale on Craigslist.

"Within 10 minutes, I had more than 10 responses," Pulaski says. "It was like a Sandy of phone calls."

Each of his sales is negotiated. The average selling price: about $11 dollars a gallon.

"Politically, he's part of the problem," says oil analyst Steven Kopits at Douglas Westwood. "But in economics terms, he's part of the solution. Obviously he's bringing fuel to the area that simply wouldn't exist if he hadn't brought it down."

In other words, Kopits says, the sky-high market price gave this apparent gouger an incentive to bring the gas to Queens and help address the shortage. If everyone in the affected areas faced $10 or $11 gas, Kopits argues, drivers would only buy what they need and not fill up.

"Then there would be plenty of gasoline for everybody," Kopits says. "And those lines would disappear."

Of course that economic world crashes into a political one -- where $11 gas is deemed immoral and unfair.

"The economists can debate and wring their hands," says James Tierney, former attorney general of Maine and a law professor at Columbia University. "But if you're an attorney general and you see price gouging going on, you're going to do something about it."

With today's actions, New York and New Jersey drivers may get soaked by Hurricane Sandy and high prices. Except at this price, affordable gas may also be scarce gas.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.

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