Thought You'd Never Ask

Just mouthing off -- because I can.

Sunday, September 28, 2008

Atlanta is out of gas

Long lines yesterday morning at the pumps in the Atlanta, Georgia metro area and elsewhere in North Georgia were followed by no gas available at all by evening.

Big question: Is Governor Sonny Perdue's "anti-price-gouging statute" at fault for keeping pump prices artificially low and making a temporary hurricane-induced shortage into something critical? Gas station owners face stiff fines for raising prices too high and "taking advantage" of consumers in a crisis--and Governor Purdue is running radio ads encouraging motorists to report instances of "price gouging" at the pumps. The gas station owners have little choice.

Perdue is a businessman and knows better, but has been making policy by pandering to voters' ignorant outrage--he is perhaps more responsible than anybody in state government for not pointing out the fallacy of price-fixing to people waiting in long lines for gas who then still feel encouraged to rail about the "unfair" price artificially fixed at around $4 a gallon.

Not all consumers are falling for it, and many are incensed at being blamed for acting in their own rational self-interest in a situation they see quite clearly as aggravated by Purdue's stupid policies. ("Fear of shortages also makes shortages worse and queuing longer by increasing hoarding. The worse that shortages are expected to be because of price controls, the more hoarding the expectation of shortages will induce--and so the shortages will be worse.")

This current extended and regional gas shortage is a classic illustration of how price-fixing hurts the consumer and disrupts supply. Consumers would be better off if gas were available at a price that reflected the temporary scarcity, so that a) consumers could self-ration according to the info they gain from accurate prices reflecting temporary shortages; b) there would be gas available for those who truly need it; and c) replacement supplies of gas would have an economic incentive to flow into the area quickly.

Up-to-the-minute consumer watchdog websites like Gasbuddy.com provide great information and transparency on the retail gas market prices to ensure that consumers do not get "gouged" and to ensure that retailers remain competitive. Consumers empowered with such self-generated information can operate much more efficiently than government can ever manage. But note: consumers have no incentive to submit to Gasbuddy.com info on where gas can be had at artificially low prices during a gas shortage. Their incentive is to shut up and run over to get in line, and maybe tell a few friends about the temporary availability before the pumps go dry again.


Second question: in the current global financial credit crunch our honorable Congresspeople are now attempting to grapple with, will these gas stations sitting idle go out of business if they are unable to obtain temporary loans to tide them over until the gas supplies return to normal? If there is no credit available for business loans in the current financial crisis, will anyone be willing to purchase the gas stations and start them up again if they do go out of business? What will this mean for the consumers?

What about the other businesses dependent on a smooth supply of gas?

Are we seeing the next Great Depression take hold already in Atlanta? Are the dominoes beginning to fall? Are they being kicked over by economically stupid government policies at all levels?


Note: It's also bad in Nashville (but at least some are still able to laugh) (via Instapundit).

UPDATE: Map of gas prices nationwide (at gasbuddy.com). Although the map reflects the gas shortage problem caused by hurricane-impeded flow through the Colonial and Plantation pipelines throughout the southeast, it is pretty clear that it looks like Georgia and North Carolina have some kind of statewide government problem going on right now.

UPDATE: In another "coming calamity" note, I've been spotting many more "For Rent" signs along the roads these last two weeks, where I have rarely seen any before. Indicating the bursting of the housing bubble and homeowners in distress, I assume. Meanwhile, as always, the renters "are on the bottom of the food chain."


UPDATE: Neal Boortz on "How to Solve the Gas Panic" -- "The truth is there is nothing inherently wrong with the free market responding to these shortages with the best device known to man for allocating scarce resources. Prices." From a look at the comments section, far too many people are still too ignorant about basic concepts of economics. This just ends up increasing everybody's pain.



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