07 Nov 2012

Hurricane Sandy and Gas Lines

ECON MOMENT, Economics, Oil, Shameless Self-Promotion 14 Comments

It’s a multimedia blitz today at ConsultingByRPM:

(BTW my sound is fine, the hair salon next door was having a party.)

14 Responses to “Hurricane Sandy and Gas Lines”

  1. Arthur Krolman says:

    Technically you’re right Bob. The market could have done “the job” wonderfully all by itself….but what grand showy job would our dear government leaders then be left with to impress their subjects? On the eve of an election no less where they are eager to show how many important jobs they do! This is our sad state of affairs under a democracy I’m afraid.

  2. Dan (DD5) says:

    I hate to say it also but it really is a sort of “poetic justice”. I mean, except for a very small minority, the vast majority of people would be outraged at gas owners raising prices, and at politicians allowing them to do so.
    It wasn’t just gas by the way. There was a shortage of gas cans, generators, flash lights, batteries, etc…… even some food shortages for a short brief period.

  3. AJ says:

    They wouldn’t be outraged…

    They would be able to purchase a generator or gas and because the profit margins for the companies would be higher they would have an incentive to allocate more resources there and the prices would eventually fall.

    Since they are not allowed to properly meet the demand based on the price that they are allowed to charge there is no incentive to offer the services that are needed. People who needed those things would find a way to purchase them and pay the appropriate price. People who can get by without will get by without. If the prices are “too high” then nothing will sell and sellers will be forced to adjust their pricing accordingly.

    The market does not have feelings, rights and does not discriminate. A person can either pay one way or another and participate in a free trade, not a coerced, and be better off or not participate and perhaps still be better off.

    This notion that the government needs to protect the “every-man” with sword and shield at all times is preposterous, unsustainable and results in MORE pain and MORE suffering in the long run.

    • Dan (DD5) says:

      Everything you said is 100% correct except your opening statement.

      People don’t understand basic economic logic most of the time. They are all stupid ignorant people when it comes to these matters.. They will all be supplied with everything they need and avoid the economic calamity caused by government price controls, and they will be seating at home on their couch complaining that Christie’s thugs didn’t crack down on all those profiteers exploiting their misery.

  4. Jordan says:

    I also heard on the mainstream news numerous times that it wasn’t a “supply problem” because there was plenty of gas in the tanks. Politicians can remind everyone it’s not a supply problem to make it seem as though economics doesn’t matter here, after all, supply is fine. For the public, that justifies big intrusions into the normal process because the typical rules are rendered useless for the time being, according to to the talking heads.

    • Matt Tanous says:

      “there was plenty of gas in the tanks”

      Maybe for the first 20 minutes after the storm passed….

      • Jordan says:

        These local politicians and some station owners were referring to the tanks in the ground at stations without power. They were saying it wasn’t a supply problem, it was just a power (distribution) problem. They muddy the issue for the average citizen so they downplay the economics of it.

        • Arthur Krolman says:

          You got it Jordan. The muddier the better is how these sneaky politicians like it. Baffle ‘em with bullsh*t!

          Supply problem is when a paying customer can’t pay the vendor and drive off a “supply” of it in their tank. And it’s because of the oppressive anti-gouging laws! Bob hit the nail on the head about we crafty entrepreneurs. If prices are allowed to go to the free market level all kinds of solutions magically appear. Hmm. I wonder if at $10/gal, a station owner might be able to hook up a generator to power his pumps? Of course he would.

  5. Jason B says:

    Geez Bob, you really irked that Teater Cannon guy, and he’s bringing the heat on your youtube page. Here’s a sample: “The reason you don’t see the prices he or you or anyone else is suggesting is because in reality it doesn’t cost the much to bring the gas into the station even after the storm. It doesn’t even come close. Commdities are controled because they are considered essential for order and perserving life. Private sectors had to be put in check years ago because it was realized that they would let people die for a huge profit margin. Notice I say margin. If it cost more to get that commodity it.”

  6. Bob Roddis says:

    1. Does anyone know how far west one must go from the affected areas to find plentiful gas?

    2. If the price were to rise to $10 gallon for a while, isn’t that like $65 more than normal for 10 gallons? Say $130 extra for two extra tankfuls is not that big of a deal considering the billions lost through destruction.

  7. martin says:

    Funny to read about this fuss concerning “price gouging”, while the average price for gasoline in the Netherlands currently is about $9/gallon (1,89 Euro/liter)…

  8. Let Them Eat Cake says:

    I think you’re right.

    For example, if a massive crop failure occurs which leads to widespread famine, the best solution is obviously to allow food producers in non-famine areas to charge sky-high prices to starving people in famine areas. In that way, those with enough money can feast comfortably whilst only those who are too poor need starve. Overall, it’s much more efficient than having some sort of government-organised relief effort, which as we all know would only distort prices and outcomes. The best possible outcome in this situation would of course be that rich people end up with all the food they want whilst poor people starve. Any government intervention would simply be a distortion away from this optimum outcome, which would of course be thoroughly reprehensible, and a travesty against individual freedom.

    I totally agree with your point of view.

    Not really. Here is a more rational argument from a better economist:

    http://www.thefiscaltimes.com/Columns/2012/11/06/Hurricane-Sandys-Lesson-on-Preserving-Capitalism.aspx#page1

  9. Contemplationist says:

    It seems things get worse in terms of econ knowledge every year. My simple fact-based econ 101 argument against price-gouging laws elicited rampant name-calling on Facebook. Stupidity and ignorance is everywhere and its displayed with pride. There is no hope…

    • Let Them Eat Cake says:

      Perhaps you should read a book that goes beyond Econ 101.

      Only doofuses think that knowledge begins and ends with 101.

      101 is largely wrong anyway.

      ‘Debunking Economics’ by Keen may help you in your quest for understanding which goes beyond basic false cliches.

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