The Gas Shortages

Parts of the Southeast has experienced gasoline shortage. Personal opinions about why there is a gas shortage includes hurricane Ike and Gustav, refineries being off-line, crowd behavior, even dumb car owners. What’s the problem? The shortage is due to the disruption of the free market by the state. EPA’s mandates that distributors deliver only a certain type of gasoline, and regulations of the government that prevent oil companies from building new refineries.[1] Shortages are impossible in a free market, they are created by the government. The economic view on the shortage is when the quantity of something supplied is less than the quantity demanded.

Even though, the news stated that there are enough gasoline, the Southeast had a large number of stations with out of gas signs on their pumps. Due to panic buying. Clay Ingram of AAA-Alabama wanted drivers to hear that there is enough gasoline out there, so don't panic. But, the consumers panicked anyway fearing that they might not have the gas to go to work. It was said that the Colonial pipeline normally carries 100 million gallons a day, making its way over 2,500 miles from Texas, Alabama and Louisiana for the marketing terminals located in the East and Southeast. Nearly 15 percent of the gas stations in Virginia were reporting outages, while some areas of the country were not so lucky. Ingram said that both the pipelines that brings gas into the Birmingham area were working normally and that there is enough gasoline stored until the refineries could resume operations. http://www.washingtonpost.com/

The Southeast was feeling the pain at the pumps. One can drive down a street and see bags or out of gas signs on the gasoline pumps. Is there really a gas shortage? The overriding cause of the shortage in the Southeast is the state legislatures’ mandating anyone selling gas at market price would be fined $10,000 to $25,000.[2] The hurricanes do not cause gas shortages, the government does. A shortage will persist if the government continues to mandate the prices one can charge for gasoline.




[1] Prechter, Robert. Gas Shortage: Irrational Herding or economics www.mises.org/story
[2] Brown, Robbie. Frustration in the South as a Gasoline Shortage Drags On. www.nytimes.com