The price of an item is a very blunt instrument. It doesn't distinguish between producers and scalpers/hoarders.
Both of those parties are equally incentivized to produce stock and sell it if the price goes up. From the point of view of a potential buyer, toilet paper straight from the factory, and toilet paper from the guy next door who bought some ahead of time are equally good.
> This is a case of consumers attempting to create small niches of artificial scarcity so that they can profit.
To a very good approximation, the marginal impact of any hoarders on the scarcity of a product is zero. Hoarders are not trying to drive scarcity themselves, they are trying to buy a product now because they think the price will rise, but they're not trying to make the price rise by buying it. The distinction is important!
> The price gouging law is not bringing toilet paper to levels where the producer of the product is taking some kind of operating loss or even reduction in profit of any kind.
This completely ignores the fact that the cost to produce a product is not a fixed amount, but rather that higher prices induce producers to make more product sooner.
Here's the crux of the issue: when supply is judged to be sufficient, nobody will hoard. When the supply of an item in the short term is in doubt, one of three things happen:
0) The price does not change, but the item goes out of stock. Some proportion of people are unable to procure the item, independently of their need for it.
1) Hoarders step in and cause the price of an item to rise. The higher price means that those who demonstrate a higher desire for an item (by their willingness to pay) end up getting it. The hoarding profits are a charge to the rest of society for a more efficient distribution of the item compared to 0.
What bothers people here primarily is that hoarders made money while everyone else is suffering.
2) The government steps in and does the distribution directly, e.g. via rationing. Here, the government decides who needs the item the most.