Some say price caps will worsen shortages; others say public health concerns justify limits.

John Grubbs was an Antelope Valley high school student with a brand-new driver's license when the 1973-74 Mideast oil embargo led the federal government to cap the price of fuel. The result: long lines to buy scarce, but affordable, gasoline. "I'd hate to see that come back again," Grubbs said.

But public health is something else again. The nationwide shortage of flu vaccinations has Americans standing in line for shots, but Grubbs - now pharmacy director at UC Davis Medical Center - is happy that state officials are trying to keep a lid on prices by investigating alleged price gouging by vaccine suppliers.

Attorneys general in Florida and Texas have sued flu-shot distributors, while California Attorney General Bill Lockyer is investigating three Southern California distributors.

Never mind that some economists say the crackdown is a mistake.

"All the traditional economic theories and business models that we have get a little bit more complicated because you're talking about people's lives," Grubbs said.

But some say keeping a lid on prices is wrong. They say free-market pricing is the most effective and efficient way of rationing a scarce product. Capping the price often worsens the shortage by discouraging potential suppliers from entering the market, said Michael Bernstein, an economic historian at the University of California, San Diego.

Free-market theorists put it this way: Would you rather pay $2.43 for gas - as the average California motorist did Friday - or pay $1.62 a gallon (adjusted for inflation), but have to wait in long gas lines as Grubbs and millions of other Americans did in 1974?

Paying the higher price is the better option, say the free-market people. While it can seem more painful, it generally does less damage to the economy while bringing new supplies out of the woodwork.

Benjamin Zycher, a senior fellow with the Pacific Research Institute in San Francisco, said offering subsidies so low-income Americans can afford vaccines is fine, but the price should be allowed to float to its natural level.

"Price rationing (of flu shots) has some important virtues - it provides incentives for people to find more vaccines," he said.

Yet the science of flu vaccines complicates that argument. Experts say it generally takes six months to create new supplies, meaning there'll be no quick injection of supply into the market.

Many believe flu vaccines are too important to leave to the vagaries of supply-and-demand economics.

"There's a difference between corn becoming more expensive in a bad crop year and something that people need to survive quadrupling in price because a (vaccine) plant goes down in the U.K.," said Robert Smiley, a professor at the UC Davis Graduate School of Management. "I don't have a problem with a small (price) increase, but a big increase - a big increase for an essential product for life - I do have a problem with."

Lockyer issued subpoenas Oct. 22 to three Southern California flu-shot distributors: Dubin Medical Inc., Nationwide Medical Surgical Inc. and Advanced Medical Sales Inc.

He didn't accuse the companies of any wrongdoing but said that the attorney general's office had received reports of flu vaccines being offered at inflated prices. He also noted that Dubin has been accused in a lawsuit by the Texas attorney general of trying to sell vaccines in that state for 10 times the normal price.

"We're in the early stages of the investigations, trying to get our arms around the market, see how it works," said Lockyer spokesman Tom Dresslar.

Officials with the three companies couldn't be reached for comment.

California has an anti-gouging law, but it only takes effect if a state of emergency is declared. Dresslar said the attorney general can go after gougers under the consumer protection and unfair business practices laws.

"Even in our economic system, where supply and demand generally, supposedly, dictate price, there is a line you can cross between lawfully creating a profit and illegally gouging consumers," Dresslar said.

Government-imposed price controls are nothing new, particularly during wartime. Peacetime controls aren't unheard of, either.

President Nixon instituted a temporary wage and price freeze in 1971. Cities such as San Francisco have rent-control laws. During the California energy crisis, state officials demanded that the U.S. government cap the price of electricity - even though some independent experts feared a cap would discourage supply and generate more blackouts.

When done properly, some economists say price caps can work. If the price ceiling is high enough so suppliers can make a decent profit, then it will prevent gouging without curbing supply.

But experts say that if the price cap is set too low, it can backfire, as when Nixon and President Carter put ceilings on fuel prices in the 1970s. Not only were millions inconvenienced by long lines at the pump, but also the government's allocation system worked badly, leaving some regions of the country with not nearly enough, said UC Davis' Smiley.

Smiley said the effect of the shortages went beyond gasoline: Plastics and rubber manufacturers, and others relying on petrochemicals, couldn't get adequate supplies. That hindered production, caused layoffs and contributed to the recession, he said.

The flu-shot shortage has left many vaccine purchasers in a predicament: Do they pay sky-high prices or go without? Most have said they'll do without; a survey by the American Society of Health-System Pharmacists showed 84 percent of hospitals would refuse to pay inflated prices.

Grubbs said UC Davis turned down offers of $400 to $600 per vial of vaccine, or roughly 10 times the usual cost. (A vial is 10 individual doses.)

The medical center has been able to procure enough to vaccinate half of its high-risk patients. The center is still formulating a system for allocating the shots, but it probably will advise doctors to reserve the vaccines for those who are most acutely at risk, he said.

Why not allocate by price? Medical professionals say they wouldn't think of it.

"If you don't get a gallon of gas, you're not going to die," said Dr. Glennah Trochet, the Sacramento County health officer. "Some people could die of the flu."