Just the other night, my mother remarked “People that deliberately raise prices during an emergency should be arrested.” I didn’t feel like getting into it at the time so I just told her that it was a more complicated situation than she was allowing for. Well, here it is a few days later and guess what? Many gas stations around here are running out of gas!
Why do you think that is? “That’s obvious Isaac, there was a hurricane that disrupted the gas supplies.” Yes, that’s true, but it’s only half the reason. There is less gas, but the other important point is that people kept using it at the same rate they always did. The result? No gas.
This is not unavoidable. There is no reason to run out of gas even when there is a supply crunch. Let me try to explain it this way. People kept using gas like they normally do because there wasn’t any obvious sign that there was less gas to go around. If people had read up on the wholesale gas situation, they may have decided to conserve since they knew it was going to be in short supply. Let’s forget the fact that no one reads that kind of stuff, they wouldn’t conserve even if they had. In fact, they would have tried to consume more. Why? Wouldn’t you? If you knew that we were going to run out of gas soon, wouldn’t you try to get some while there were supplies?
So the trick is to tell people that there is less to go around AND make them willingly conserve. How in the world do we do that? RAISE THE EFFING PRICE FOR GOD”S SAKE! High gas prices are not a crisis, no gas is. When you raise the price, people will use less of it. And here’s the real beauty of it, it doesn’t matter why the price is higher, people will automatically conserve in reaction to the higher price. All the information you need to have as far as how scarce something is, or how in demand it is, is reflected in the price. If the price is “high,” you know it is in high demand or there is a scarcity of that thing. People will use less of it with a higher price, and the demand will slack off and the price comes down eventually.
It works really well, that is unless there is government interference in the pricing system. Due to so-called gouging laws, retailers cannot raise the price as far as it should be in order for gas to be readily available. So I hope that everyone that supported this law is happy about having to scrounge for gas. Actually, that’s just a dream, I know full well that those people will never put these two things together…
free trade, gas, goughing