Gas Price Gouging Laws Create Shortages

As hurricane Ike travelled through the gulf, refineries shut down and threatened residences scurried to fill up their tanks and their generators.  In what looks like a textbook example, this simultaneous shift in demand (increase) and supply (decrease) has forced the price of gasoline upwards in many states.  But the price gouging laws have predictably led to shortages in some states.  Via Cafe Hayek comes this story on gas shortages in Tennessee:

Knoxville-area drivers are seeing more bags on gasoline pumps today as a petroleum shortage spreading throughout the Southeast hits local gas stations, groceries and convenience stores.

Refinery outages along the Gulf Coast in the wake of Hurricane Gustav have created severe shortages, causing retailers like Weigel's to scramble to keep their pumps flowing. And Hurricane Ike is bearing down on Texas, drawing a bead on North America's petroleum manufacturing capital of Houston and portending a worst-case scenario for dealers and consumers.

"Knoxville has been out of gas since Monday. We've been buying gas from Atlanta, North Carolina, Kentucky, anywhere we can get it," said Bill Weigel, head of the Weigel's chain of convenience stores in Knox, Blount, Sevier, Loudon, Anderson and Monroe counties.

Weigel said Thursday about a half-dozen Weigel's stores are out of gas, including Oak Ridge locations, and he fears that number will grow as gasoline shipments from Louisiana and Texas refineries through a network of pipelines are disrupted.

I've said it before and I'll say it again.  Gasoline is scarce, relative to the amount people want, and must be rationed.  Here we have an unusual event that decreases the supply sharply and increases the demand sharply.  But by trying to "do something", politicians who voted for these laws have now made it more difficult to get gasoline in these states because raising prices now carries a penalty.  How, then, is gasoline to be rationed?

HT to Kip in the comments to this post.

Comments

[Nigel Stout]

I was glad to see Weigel's apology in the paper the other day. It's nice to know they respect the community they depend on.

[Janice]

I agree, you don't see big corporate gas retailers doing that for the community. That just shows you who has our best interest in mind and that is where I I will be spending my money.

[Gas Mileage]

Thanks! I'm always on the hunt for gas saving tricks but fuel is scarce.