The next time a hurricane is approaching and the people on TV who tell you what to do before a hurricane tell you to fill up your gas tank: Fill up your gas tank.
In the gas lines. twitter.com/jeffjarvis/sta…
— Jeff Jarvis (@jeffjarvis) November 1, 2012
In New Jersey, three things are in short supply: electricity, gasoline, and patience. Predictions that Sandy would result in increased gasoline supply due to fewer drivers were completely wrong — primarily because the scale of the storm far exceeded expectations. Cute experiments aside, gasoline has been the go-to method of generating power in blacked-out areas. Add in crippled public transit and that means demand has soared, leading to scenes like the one above.
From Reuters:
New York taxi and car service companies started pulling vehicles off the road on Thursday as the fuel crunch deepened, with the vast majority of storm-hit service stations in the greater New York area now out of gasoline or without power.
Power outages and fuel shortages have forced many gasoline stations to shut, and now threaten efforts in New York and New Jersey to get back to business after Hurricane Sandy.
Many homes and businesses that have lost power are also reliant on gasoline and diesel run generators, including many of the Wall Street banks in lower Manhattan. …
“Did you ever think you’d see this again?” one driver was heard saying through his car’s open window.
In a local newscast, the New York City NBC affiliate reported that one gas station was limiting customers to $20 in gas.
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In New Jersey, gas stations aren’t allowed to jack up prices. Slate’s Matt Yglesias argues that they should be able to charge whatever they want — to, in essence, allow supply-and-demand economics to reign.
The Christie administration fined a gas station for breaking price gouging rules back in September, and issued a press release before Sandy hit noting that case and explicitly warning retailers not to respond to the hurricane by raising prices. The failure to allow prices to adjust doesn’t magically eliminate the supply side problems, it just means that the gasoline is misallocated and lots of people need to waste time in line. You can also see that the combination of shortage and underpricing seems to be leading people to overconsume when they do get to the front of the line.
Last but by no means least, the lack of price gouging is harming things on the supply side. If it were possible to earn windfall profits by transporting gasoline into the affected areas, then human ingenuity would be finding ways to do it. But if you restrict retailers to earning merely ordinary profits, then people won’t take extraordinary measures to increase supply.
This is why Matt Yglesias is not likely to soon be elected governor of New Jersey.
There’s probably only one, equally unpopular solution: waiting. But good news this morning: that wait may not be long.
Schumer: Port of NY now open for fuel sources, which should alleviate gas shortages in region
— Matt Flegenheimer (@mattfleg) November 1, 2012
