Hurricanes and Gasoline Price Gouging

Abstract

Conventional wisdom suggests that gasoline price gouging before and after natural disasters is widespread. To explore this conjecture, we compile data on more than 4.7 million daily station-level retail gasoline prices. We combine these data with information on wholesale rack prices, spot prices, hurricane threats and landfalls, weather, traffic, and power outages. We investigate the effect of hurricanes on retail prices, wholesale prices, retailer margins, fuel price pass-through, and share of stations reporting transactions. We exploit the fact that the exact timing and location of hurricane landfalls is conditionally exogenous for identification. We find no evidence for widespread price gouging. Instead, we document evidence consistent with shortages predicted by theory in the presence of restrictions on price movements.