2008 September 27 Saturday
Why Gasoline Shortages Rather Than Higher Prices?

Why don't the gas stations just raise their prices so high that they do not run out of gas?

Gasoline shortages hit towns across the southeastern United States this week, sparking panic buying, long lines and high prices at stations from the small towns of northeast Alabama to Charlotte in the wake of Hurricanes Gustav and Ike.

In Atlanta, half of the gasoline stations were closed, according to AAA, which said the supply disruptions had taken place along two major petroleum product pipelines that have operated well below capacity since the hurricanes knocked offshore oil production and several refineries out of service along the Gulf of Mexico.

Drivers in Charlotte reported lines with as many as 60 cars waiting to fill up late Wednesday night, and a community college in Asheville, N.C., where most of the 25,000 students commute, canceled classes and closed down Wednesday afternoon for the rest of the week. Shortages also hit Nashville, Knoxville and Spartanburg, S.C., AAA said.

Are the oil companies keeping gasoline prices down in company-owned stations in order to avoid a political backlash? Might de facto price controls be causing the shortages?

Share |      By Randall Parker at 2008 September 27 12:04 AM  Economics Energy


Comments
Ken Hirsch said at September 27, 2008 10:41 AM:

Why? Easley activates price-gouging law

[ParaPundit: I fixed that link in case anyone found it didn't work]

PurpleSlog said at September 27, 2008 8:48 PM:

"Are the oil companies keeping gasoline prices down in company-owned stations in order to avoid a political backlash? Might de facto price controls be causing the shortages?"

Yes.

Kelly H said at September 28, 2008 8:17 AM:

I found myself arguing with someone on this subject who didn't get the "Half of all children are below average. Something must be done!" joke. I had to explain it. Which really damages the effectiveness to your audience.

Randall Parker said at September 28, 2008 10:02 AM:

So North Carolina Democratic Governor Mike Easley has activated a law against gasoline price gouging. This will discourage gas stations from charging a price that makes supply and demand equal. As a result lines will get longer and more gasoline stations will run out of gas.


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