Would you rather have gas (at high prices) or no gas?

September 13, 2008

In the news today: price gouging at the gas pump after Hurricane Ike. I’m sick of it.

President Bush had his say:

The Department of Energy, the Federal Trade Commission and, I know, state authorities will be monitoring gasoline prices to make sure consumers are not being gouged.

Whatever. He has an MBA for Christ’s sake. He should know better. Oh, I forgot. He’s a politician.

One of the myriad charges of price gouging:

Pat Woodrum of Summerville and her family spent $250 topping off the tanks in five of their vehicles Thursday evening to avoid the spikes.

But that wasn’t even quick enough.

While she was sitting in line at a station on Bacon’s Bridge Road, Woodrum reported that the price changed from $3.49 to $3.69 a gallon.

“I thought that it’s absolutely ridiculous,” Woodrum said. “Of course, the oil companies rule the world right now. That’s just not right.”

If you’re in a line waiting for gas (ignoring the fact that she has FIVE vehicles), obviously prices are too low. And the end result of prices that are artificially set too low by government fiat: shortages.

Before Hurricane Gustav ran ashore at New Orleans in recent days, drivers were finally seeing relief at gas stations and convenience stores, with prices retreating from the $4 per gallon level. But they found prices climbing above $4 a gallon Friday, heading toward the $5 mark. Some drivers had trouble even finding gas as stores placed plastic bags over pump handles when they ran out.

Econ 101, bitches.

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17 Responses to “Would you rather have gas (at high prices) or no gas?”

  1. superdave524 Says:

    In the long-run, allowing gas prices to reach their natural level through supply and demand will probably be a good thing. Prices will get higher, people will use less of it. Alternative sources of fuel will become more cost-effective. Pollution may decrease. People will walk more and probably consume less. America will lose some weight. All those are good things. Sadly, most of us have relied on cheap gas that’s been available forever, and bought houses far away from our jobs (not me, I walk to work. But lots of people) and bought cars, trucks and s.u.v.s that get horrible gas mileage, which makes demand for gas relatively inelastic in the short term. We can’t really choose not to buy gas.

    Some of our addiction may have been assisted by the gummit’s safety standards on cars. Was it you, or one of your buddies that did the post on Geo Metros? Suckers got fifty miles to the gallon. Now companies brag about thirty miles to the gallon. Perhaps some of the safety measures have helped save lives. Perhaps. ‘Course, motorcycles are still allowed on the road. They wreck, they die. I got a convertible. I wreck at a high speed, I die. Speed limits at 55 m.p.h. probably saved some lives (and gas), but were allowed to be raised to 70. I’m not advocating a return to the lower speed limit, but if your government wants to foster safety and gas preservation, that’s a lot more effective than adding weight to your vehicle fleets that markedly detract from fuel efficiency.

  2. Quakerjono Says:

    “I’m not advocating a return to the lower speed limit…”

    I am. People can’t fucking drive anymore. Seriously, zipping in and out of traffic like real life is a Grand Theft Auto game and they’re late to put a beat down on their hos or something.

    I’m all about lowering the speed limit. 50 mph and immediate and permanent revocation of your driver’s license if you even inch over that. Get caught again, instant bullet to the head.

    I’m not messing around with this shit anymore.

  3. superdave524 Says:

    Yeah, but driving fast is fun!


  4. I don’t believe there are any real significant shortages of supply anywhere in the country. Stations ran out of gas because short-sighted selfish imbeciles flocked to the pumps like frenzied sharks in blood-infested water.

    That said, if there’s not really a shortage, the obscene gas prices are really the result of profiteering. Funny how we almost instantly see pump prices rise whenever some little hiccup happens anywhere along the supply line, even at the Middle East wellhead.

    And, yep, I agree people don’t know how to drive any more. But that’s a whole different rant.

  5. John in IL Says:

    I don’t believe there are any real significant shortages of supply anywhere in the country.

    You can believe whatever you want but some stations have run out of gas. And gas stations still have fixed costs to cover if they run out of gas. No gas. No income.

    How can you stop “short-sighted imbeciles” from buying too much gas? Raise the price. And if gas station owners raise prices too much, the run the risk of losing business in the long run.

    Another thing. In your post on the subject, you said that at the station where you buy gas, prices have only increased 10 cents, but other stations’ prices have risen much higher. I’m assuming that the station you went to will be very busy and the high priced stations won’t be. If there is no actual shortage, the lower priced station will reap the benefit with higher profits. The higher priced stations will lose business. So much for gouging.

  6. John in IL Says:

    QJ:
    I thought it was just me being curmudgeonly about the way people drive today (THOSE DAMN KIDS!). It’s insane. I generally drive the speed limit and the fuckers are nearly crawling up my ass. I get pissed so I slow down more. It’ll probably get me killed one day but it’s fun.

    Dave:
    Yeah it was me with the Metro post. And NDT has a Geo but it is one of those god forsaken Trackers.

  7. superdave524 Says:

    I test-drove a Metro convertible. Almost bought one.

  8. Quakerjono Says:

    “You can believe whatever you want but some stations have run out of gas.”

    And some people who smoke get lung cancer…

    “Some” is not a good quantifier, particularly when one is considering the economies of a nation.

    The fact alone that prices were jumping inordinate amounts a day or two ahead of Ike even making landfall is a clear indicator that “econ 101” isn’t enough to satisfy here. Further, the fact that demand has not increased across the country, and has actually fallen, while Ike did not do anywhere near the amount of damage predicted, should mean by “econ 101” rules, that the price should go right back down to where it was pre-Ike, with only potentially a slight bump. Has it?

  9. John in IL Says:

    “Some” is not a good quantifier, particularly when one is considering the economies of a nation.

    Can you define “econonies of a nation”? I’ve never heard that term before. I was referring to specific (local) markets.

    The fact alone that prices were jumping inordinate amounts a day or two ahead of Ike even making landfall is a clear indicator that “econ 101″ isn’t enough to satisfy here.

    So now you’re the judge of what is an “inordinate amount” and the “correct” price. As smart as you are, I don’t see how you could determine what that price should be.


  10. Yeah it was me with the Metro post. And NDT has a Geo but it is one of those god forsaken Trackers.

    33 mpg on the freeway and 25 in the city, thankyouverymuch.

    And Dave has a point; my very first car, a 1985 Mercury Lynx, could pull around 45 mpg on the highway, and my second, a Ford Tempo GLS (Grand Luxury Sport, ha ha) could manage 40.

    Three things these cars have in common:

    1) Stick shift. No torque converter loss = higher mpg.

    2) No A/C. Even when it’s not running, it’s still being powered.

    3) Tiny engines — the Lynx had 65 hp from its 1.6L four cylinder, the Geo manages 80 from its same-size four, and the Tempo had a rip-snortin’ 98 from its humongous (for a four-banger) 2.3L.

    To put that in perspective, the Mazda3 I just sold to my folks had a great-great-great-great-grandson of the Tempo’s engine under its hood, with the same 2.3L putting out 150 hp at full bore — but the best it could do on the highway was 33 mpg.

    Can’t upset the laws of physics. The more power you want, the more fuel you got to put in her, son.

  11. John in IL Says:

    It’s still ugly.

  12. Quakerjono Says:

    “So now you’re the judge of what is an “inordinate amount” and the “correct” price. As smart as you are, I don’t see how you could determine what that price should be.”

    Would you prefer the term asymmetric price transmission, then? The fact that even as oil fell to five month lows, gas, which was in fact not in short supply, increased its price, in some cases almost by the hour? That the price increases amounted to little more than a coercive monopoly as price differentials between gas stations in various parts of the country, indeed, in various parts of the same cities far exceeded a standard distribution?

    Again, until you have shown that the supply issue is widespread and the norm rather than the suspicious outlier, then your reasoning that it’s a simple above-the-board issue of supply and demand is based on even murkier assumptions than my faith in a fair market value and that people have the common sense God gave a cat to see it.

  13. John in IL Says:

    The fact that even as oil fell to five month lows

    Last time I checked, you couldn’t put oil in your gas tank.

    gas, which was in fact not in short supply

    Really..

    More than 20% of US oil refining capacity was shut, limiting fuel deliveries and prompting the Department of Energy to release 309,000 barrels from its emergency stockpiles.

    That the price increases amounted to little more than a coercive monopoly as price differentials between gas stations in various parts of the country, indeed, in various parts of the same cities far exceeded a standard distribution?

    That makes no sense. A monopoly, by definition, has total control over the price of its product. If there was a monopoly, you wouldn’t see any differences in price. Instead, we have large price discrepancies in local markets.


  14. It’s still ugly.

    Doesn’t matter. I look good in it. 🙂

  15. superdave524 Says:

    I think a Geo would look like a tu-tu on me. Not so much to be driven as worn.

  16. Quakerjono Says:

    Last time I checked, you couldn’t put oil in your gas tank.

    And yet, when the price of oil goes up, so does the price of gas.

    Really..

    Yes, really.

    The fact that there was a temporary disruption in supply that caused the federal government to release stocks does not indicate a shortage in the overall market or even in local markets. When someone buys a loaf of bread in a grocery store, does that automatically trigger the grocery store to increase the price for whatever loaves of bread they still have in stock? Yet, in some cases by the hour, gas prices rose, if your logic is to be followed, by just such a mechanic.

    That makes no sense.

    Fine. Limited coercive monopoly in regards to specific affected areas. The point still stands: acting independently of free market price constraints, the price of gas rose unevenly. In some areas this increase was so large that the only possible explanation is inflating prices beyond the expected price point.

  17. John in IL Says:

    The fact that there was a temporary disruption in supply that caused the federal government to release stocks does not indicate a shortage in the overall market or even in local markets.

    Again, really? No shortages? The article you linked is from April. For more current news see here:

    Many gas pumps across Chattanooga and North Georgia went dry Tuesday, leaving motorists searching for fuel.

    “I was worried that I wouldn’t get any gas at all,” said Cari Yeomans, who was traveling from Knoxville to Birmingham, Ala., on Tuesday when she found regular unleaded at a Texaco near Interstate 24.

    “This is not a good time to be on the road right now,” she said. “I was sort of scared that there wouldn’t be any gas.”

    or here:

    Some gas stations on the Peninsula were running dry on Tuesday as cuts in petroleum supplies from the Gulf of Mexico continue to make the region susceptible to shortages and price increases.

    The problem with statewide supplies running low appears to have started in southwest Virginia over the weekend, when the Plantation Pipeline serving that region ran at a reduced rate.

    or here:

    Hurricane Ike has affected gas prices across the Southeast with numerous oil refineries being shut down along the Texas Coast, causing gas prices to jump to more than $5 a gallon at some service stations in Georgia and Florida.

    Several gas stations in Bainbridge-Woodalls, Raceway and several others-along with 80 percent of service stations in Tallahassee, Fla., are without gas and anxiously awaiting shipments.

    I got more of them if you want. So your bread analogy is useless, since we don’t have bread shortages.

    Fine. Limited coercive monopoly in regards to specific affected areas. The point still stands: acting independently of free market price constraints, the price of gas rose unevenly. In some areas this increase was so large that the only possible explanation is inflating prices beyond the expected price point.

    The definition of a coercive monopoly (according to wiki):

    a coercive monopoly is a business concern that prohibits competitors from entering the field, with the natural result being that the firm is able to make pricing and production decisions independent of competitive forces. A coercive monopoly is not merely a sole supplier of a particular kind of good or service (a monopoly), but it is a monopoly where there is no opportunity to compete through means such as price competition, technological or product innovation, or marketing due to coercion; entry into the field is closed.

    That definition is the exact opposite of what you’ve described.


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