It’s literally on the first day of a typical introductory economics course that students are typically taught that price caps lead to shortages. Shortage lead to non-price rationing schemes for what supply is available, such as long lines.
Unfortunately, our politicians seem to have less than one day of economics training. Laws against “price gouging” — that is laws that forbid the market to adopt the market-clearing price dictated by supply and demand — are nothing more than price caps, and lead directly to shortages. We see this playing out once again in the wake of Hurricane Sandy:
Without “price gouging” laws, the price would rise, thereby encouraging distributors to ship more gas to the area, and also discouraging people from buying gas they don’t need. Also, it would put a stop to people waiting hours for gas.