Posted on 09/28/2008 9:50:27 PM PDT by Kaslin
First ... If you're not from Atlanta or any other area where about one out of five gas stations is open and the lines are 90 minutes and more, read this story. If you like this kind of stuff you can read this one too. Things are tough, and have been for about six days. Friday morning I was out there at 3:30 a.m. looking for gas for my car. Now after you’ve finished reading about Atlanta’s problems (problems shared with many other Southeastern cities) you can click here to read about how nearly 200 gas stations in Atlanta are being investigated for price gouging. Don’t investigate them! Reward them! Price gouging is exactly what we need! It should be encouraged, not investigated.
OK ... now that you've finished your reading assignments, I shall tell you how to solve this problem QUICKLY. Not painlessly .. but fast.
The real problem now is panic buying. People will run their tanks down by about one-third and then rush off to a gas station. Lines of cars are following gas tanker trucks around Atlanta. The supplies are coming back up, but as long as people insist on keeping every car they own filled to the top and then filling a few gas cans to boot, we're going to have these outages and these absurd lines.
So, how do you stop the panic buying? Easy. You let the market do what the market does best, control demand and supply through the price structure. The demand for gas outstrips the supply right now, so allow gas stations respond by raising the price of gas .. raise it as much as they want. I’m serious here so stop your screaming. The governor should hold a press conference and announce that effective immediately there is no limit on what gas stations can charge for gas. I heard that there was some gas station in the suburbs charging $8.00 a gallon. Great! That’s what they all should be doing. Right now the price of gasoline in Atlanta is artificially low and being held down by government. That’s exacerbating the problem, not helping it. Demand is not being squelched by price.
As the prices rise, the point will be reached where people will say "I’m fed up with this. I'll ride with a friend, take the bus or just sit home before I'll pay this for a gallon of gas." Once the price of a gallon starts to evoke that kind of reaction, we're on our way to solving the problem. When gas costs, say, $8.00 people aren't going to fill their tanks. They also aren't going to rush home to get their second car and make sure it is filled up either ... and you can forget them filling those portable gas cans they have in the trunk. Some people will only be able to afford maybe five gallons! Fine! That leaves gas in the tanks for other motorists. Bottom line here is that people aren’t going to rush out to fill up their half-empty tanks with $8.00 gas. Instead they’ll buy only what gas is absolutely necessary, and then wait for the prices to come down.
As the price drives people away from the pumps, the tanker trucks will have the opportunity to fill every underground tank at every gas station in the area. Then, when the tanks are all full again, the gas station operators will start looking around wondering where in the world their customers are. One by one they'll start lowering the price of a gallon in order to attract customers back to the pumps. Yup .. it will be time for a good old fashioned gas war. As the prices fall people will come out of their garages and find that they can fill up without waiting and without the station running out. Once they feel that the shortage is gone they’ll resume normal behavior and the prices will come down to pre-shortage levels.
Oh, sure. People will yell and scream about the so-called "price gouging" on the part of the stations. They’ve been taught this by politicians. Pundits … especially those on the left … will start blathering about “greed” and demanding regulations. Pelosi will probably emit a screech or two about windfall profits taxes. The truth is there is nothing inherently wrong with the free market responding to these shortages with the best device known to man for allocating scarce resources. Prices.
Politicians can do all the grandstanding they want ... and work for face time on the television decrying those evil people trying to make a profit off of a scarce resource. That seems to suit them just fine. But if they really want to end this nonsense they'll turn the marketplace loose and get the hell out of the way.
Prices.
Neal has it right, it is so simple it will work.
Capitalism 101
So which station(s) do you own?
The real issue with the gas crisis in Georgia is that these idiot liberal environmentalists have made it so difficult to build a new refinery that we’re strained to capacity on a good day.
Now you have 50% of the Gulf Coast’s refineries knocked out by Hurricane Ike, there’s not enough gas to go around.
Plus, until earlier this week, you had to reformulate your gas especially for the Atlanta metro because of EPA air requirements.
Once again, government intervention and regulations cause a crisis that can be otherwise avoided.
Bingo...apparently Boortz understands economics. What’s funny is, here in Iowa gas is down to $3.28 now, with no shortages or problems.
Do you work for NPR, CBS, or the Democratic Party?
To not allow businesses to set their own prices is akin to declaring for oneself the right to seize the property of another.
So, which Democrat are you an economic advisor for?
Obama?
Pelosi?
Reid?
All of the Rocket Surgeons listed above?
The real problem now is panic buying. People will run their tanks down by about one-third and then rush off to a gas station. Lines of cars are following gas tanker trucks around Atlanta. The supplies are coming back up, but as long as people insist on keeping every car they own filled to the top and then filling a few gas cans to boot, we're going to have these outages and these absurd lines.
Nope - Boortz, if you're reading this don't do your own income tax, because you've obviously flunked 8th grade math. For Boortz, those of you who voted for Clinton, and those of you who are thinking about voting for Obama, here's how this works. For NORMAL TIMES, assume a million cars in the atlanta area with and average of 20 gal capacity that use 7/8ths of a tank every week and then fill up once a week (that would be the gas gage on 1/8 of a tank for those of you who are planning to vote for Obama). To calculate the daily demand multiply the number of cars times the tank capacity times the amount of the tank they use and then divide by the number of days in a week (because we're assuming an even distribution of filling during days of the week)Here is what you get
1000000 (cars) * 20 (gal) * .875 (tank capacity at fill) = weekly demand = 17,500,000 gal /week. to get the daily demand divide by 7 and get 2.5 million gallons a day. This is the Atlanta daily gas demand when people fill every week.
Now figure out what happens when people fill every day instead of every week. use same numbers of cars and same mileage
1000000(cars) * 20 (gal) (.875/7) tank capacity (dividing the 7/8ths of a tank by 7 because they have only used 1/7th of the gas they would have for a week) we get 2.5 million gallons per day and we don't divide by 7 because people are filling daily. Note that the daily gas useage is exactly the same whether or not people fill daily or weekly. This is not rocket science. This is 8th grade arithmetic. So anyone who tells you the Atlanta gas shortage is cause by "panic buying is either Stupid (if they really believe it) or a liar (if they work in the government or the media)
As far as his "solution" goes, letting prices determine demand, that is OK for the short term because it reduces lines, but it isn't a long term solution, because so-called panic buying isn't the cause of the problem. The problem is a real shortage of gas in the Atlanta area caused 100% by the government and it's rules on botique blends for various areas. There simply is not enough of the special Atlanta blend to meet normal every day demand. I don't see Boortz yapping about this, nor do I hear anyone else in the media laying the blame squarely where it belongs - on the envirowackos and their accomplices in the EPA.
Reponding quickly according to the law of supply and demand in a very dynamic market would be a better way of putting it.
In Germany gas already costs $8 a gallon. Remarkably the economy still functions.
At a reduced level and at a lower standard of living. When you pay $8/gal of gas then that is money that you can't use for something else. One could say that the economy of the old Soviet Union funcitoned, but you wouldn't have wanted to live there.
Standard of living is an interesting term. Realistically Germans just drive more efficient cars and sometimes take public transport. People live just about the same.
The biggest drag on the economy is the inflexible job market which has nothing to do with energy prices.
Efficiency often pays for itself.
In terms of "standard of living" - sometimes having more free time to spend with family rather than taking care of huge houses and vehicles actually makes you happier.
No doubt, but shouldn't people be able to decide that for themselves rather than have it imposed from without?
Realistically Germans just drive more efficient cars and sometimes take public transport
??? This 
is more efficient than this?
It is certainly more expensive.
Commuting long distances in the US is considered quite normal, which is why we need cheap gas.
Otherwise, we'll be forced to move into the Blue Borg Cubes that we call U.S. cities, where we can more easily be controlled by corrupt Democrat pols and their strong-arm thugs.
You can tell the FR members who have never had to truly worry about how they are going to pay their bills show up. Apparently neither of you have ever been a position where you couldn’t afford to put gas in your car. While I completely understand the concept posted and the logic behind it - there is a fine line between the free-market solution and the punishing of those who are less financially blessed.
Having recently been in a position that every penny was spoken for, and fueling the vehicle just to get to work and make just enough to scrape by, I can see how some people would be completely buried if gas were jacked to $8 just to stem the demand.
And not everyone has access to public transportation (not available anywhere near here), and no ride share possible because of the only work there was to do at the time...
The Lord has blessed us and we are now moving and are back with a steady and adequate paycheck - and $8 per gallon for a short time would not represent a finance-crashing event. But had gasoline been $8 here, even for a couple of weeks - we would have fallen desperately in a hole - as I could not have afforded to even GO to work...
And please, no lectures on personal finance - been there and I am completely aware of many means of managing such - and it is our careful management that kept us afloat. $8 per gallon would have sunk that boat.
So accusing me of being a Democrat stooge, or someone from a the MSM is no more appropriate than my initial response (asking about gas station ownership).
There is a difference between free-market and predatory... And shutting down those who already have a very hard time paying for $3.70-4.00 gas by jacking the price is nothing but fuel (pardon the pun) for the leftists who want to shut down all free-market enterprise...
It seems the choices are:
1) Free market which will let the price rise until the demand falls and the supply increases
2) Price controls (and this over zealous anti-gouging laws are just that) which results in lower prices and shortages of gasoline
3) Government subsidy where tax payers fund gasoline for others
The reality is that there is always people on the edge of liquidity and price increases will put them under. It has already happened to some when prices hit $4.
My family has in the past crossed below that line in years past. We have also helped others when we were blessed and they were struggling.
Can you think of another option beside the three above?
I've had to worry about that many times, including recently. I'm not rich, and $8 gas for more than a week or two would be quite unpleasant.
There is a difference between free-market and predatory...
Not when it comes to pricing, there's not. You're subscribing to "just price theory" - a socialist fallacy. Predatory behavior would mean wrecking another station's gas pumps, or blocking the entrance to their pumps, or using extortion, force, or coercion to force other station owners to sell at a certain price. Setting the price where the market puts it is simply smart, and it's good for the market as a whole.
So accusing me of being a Democrat stooge, or someone from a the MSM is no more appropriate than my initial response (asking about gas station ownership).
It's exactly as appropriate as your initial response, and was designed to exactly mirror it. I think it worked.
And shutting down those who already have a very hard time paying for $3.70-4.00 gas by jacking the price is nothing but fuel (pardon the pun) for the leftists who want to shut down all free-market enterprise...
So we should only shut down *some* free-market enterprise?
The point here isn't *what* the price of gas should be in any given situation. It's *who* should be making those decisions. I believe the decision about what price gas is sold for should be made by the owner of that gas (the gas station, etc.), not - ever - by a third party like the government.
Yes - a very simple one:
DRILL HERE, DRILL NOW, BUILD REFINERIES (strategically located - not all concentrated in hurricane-prone areas).
And yes, I know that wouldn't solve the current issues - but it should prevent similarly-caused fuel supply shortages in the future.
About the only government regulation that makes sense - how about rationing? I would prefer that to blown-up prices.
And I too have helped others out when I have been in a position to. But I know for the last month - had gasoline shot up to the kind of prices being advocated - the boat we were bailing as hard as we could to keep afloat would have been completely torpedoed in two - glug glug.
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