When Suppliers Fail to Perform, Let Them Raise Prices

A NY Times article chronicles how record failures at oil refineries has caused gasoline prices to highs not seen since last summer's records. Oil refineries have been plagued with:

• fires
• power failures
• leaks
• spills

The net effect is that short term gas production declined while demand increased causing a refining bottleneck. Never before has it been more profitable for refineries to shut down for maintenance and reap the benefits of higher prices.

From a procurement perspective, if a supplier fails to perform due to poor maintenance practices --- does the supplier receive a price increase from their customers? The answer is a resounding no way!

An ethical supplier wants to maintain a long term mutually beneficial relationship with its customers - NOT raise prices to take advantage of a short term supply disruption. Taking unfair advantage of a short term market disruption is usually called "price gouging".  I think allot of folks feel "gouged".