OK, just another reason why government is a bunch of idiots. In Hawaii, they are instituting a cap on the wholesale price of gasoline. This is a horrific idea. Living in California I am accutely aware of the pain that high gas prices can bring but having government place caps on the price of anything is just a bad idea.
Free Markets depend on supply and demand. If prices are not allowed to adjust than there is an imbalance somewhere. My incentive as a supplier is to supply gas at a price P I can make a profit at. When the price of my product reaches a certain level I have an incentive to produce Q amount. If the price goes up I have incentive to produce a little more. As a consumer my incentives are reversed. These two forces almost magically move the price to a point where all the consumers demands are met for a given price point.
Governments mess with incentives at great peril. Seriously, incentives move humans. If you put a price cap on a free market system the effects are quite obvious. The price is lower than what the producer can make a profit at. He has no incentives to produce more. However, since the price is artificially low there will be greater demand for the product. Therefore a shortage will ensure. People who want gas will not be able to get gas. Producers will not produce more gas at a loss so the supply curve can not shift outwards.
Imagine for a second if government, to stem the tide of housing cost, put a cap on the sale price of homes. Now all homes have a maximum price of $100K. Don't you think there would be a huge rush of people wanting to buy homes? Don't you think the people selling their homes would look at that and say, "No way in hell am I selling my $500K home for $100K!" Builders, not able to turn a profit on new homes, refuse to build more and instead concentrate on commercial real estate. Many people want homes but none are for sale. People are unable to relocate for work because they are not willing to sell their homes or can not find any homes to buy. The economy would grind to a halt because there would be an inefficient allocation of resources.
So tell me again, what is good about price caps?