New Hampshire does not have a “price gouging” law. Thank goodness. If it did, things would be worse, not better.

Every time there is a natural disaster, war or other event that causes the price of oil and gasoline to rise, some people complain that they are being “gouged.” They demand that the government stop it. But to do that, the government would have to know what the correct prices of gas and oil are. The government doesn’t know that.

The government cannot know what the “right” price for something is because there is no “right” price. It depends on the circumstances. When governments attempt to control prices through anti-gouging laws, they risk causing more serious damage than high prices would cause.

After Hurricane Katrina in 2005, gasoline prices in North Carolina rose substantially. The Legislature didn’t like that and toughened the state’s price-gouging law. Three years later, Hurricane Ike hit. Unlike in 2005, the state suffered gas shortages and long lines at the pump. Demand for gas went up, but the price stayed artificially low. Naturally, long lines and shortages followed, Roy Cordato of the John Locke Foundation pointed out at the time.

Every state that borders New Hampshire has a price-gouging law. And yet New Hampshire has a lower average gas price than all of those neighboring states. New Hampshire lets the market keep supply and demand in relative balance. It works. Let’s leave it that way.