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If you think price gouging is immoral, go watch this video: Is Price Gouging Immoral? Should It Be Illegal? #f #t
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I usually find that this argument goes all the way back to the story of Cain and Able - am I my brother's keeper? In the context of that video the question would be recast, am I to restrain my asking price in an emergency situation?

To my mind the answer is "maybe" and would be extremely sensitive to the particular factual context. If it's a matter of life and death - as in I have the antidote for the poison I just put in your drink - then yes. If it's a matter of war profiteering where it might mean the difference between national survival or not, then yes. If, as in the video, it's a generator so that I can run my TV to watch a soap opera, then nah.

Here in California we also have as part of our law of contracts a provision that makes unenforceable those contract terms that are "unconscionable'. What's "unconscionable"? - generally when a stronger party takes advantage of the weakness of another to a degree that is generally considered shocking. That, of course, is highly subjective.

Here in Santa Cruz we do seem to have offended some deity and we get earthquakes, floods, fires, tsunamis, animal-rights terrorists, and the like rather more than we'd like. I have generally observed that during those situations that sharing and giving have been the norm rather than price elevation. Perhaps our area is just abnormal that way.
This comes back to the "socialism is for small groups / capitalism is for large groups" dichotomy. And we need to remember that a legislature is a small group, yet it legislates for a large group. So it's likely that politicians will usually make laws appropriate for small groups and then apply them to a large group. At least, that's my explanation for why so much legislation is counter-productive and contrary to the law.
In general, I tend to agree with the argument. Just note that one premise here is that you don't have to buy the generator. This would depend on the situation, and I think the price gouging thing is aimed at the situation where you actually don't have any choice. I.e. the seller has a monopoly.

Secondly, although allowing price to fluctuate means goods go where they are needed most, "need" is here relative, and if money is unevenly distributed, it could mean that poor kids die from diabetes, because rich people need to keep their beer chilled.

Finally, in practice, I think a poor person with diabetes could ask the rich person nicely, and have her make a bit of room for some insulin next to the beer. :-)
No system involving people is perfect. The flaws in making price gouging illegal are worse than the flaws in allowing the price system to work. For example, if that monopoly exists, how best to break it? By leaving them their monopoly but forcing them to allocate their sales first-come first-served? Or by letting them set a price that some people decide that other people need it worse than them? And at a price which is profitable enough to break their monopoly as soon as possible.
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