What would happen if the price of gas in the ravaged northeast went to a gouging price? there are suggestions by John Cochrane of the University of Chicago below. The claimed effects are mostly good. Price gouging is often defended by economists.
I think it might induce more theft of gasoline as well though, and clearly the well to do would likely be advantaged. A lot what is suggested here would likely go on in practice as well.
- People would voluntarily stay home.
- Rather than allocating gas to people with time on their hands to wait in line, gas would go to people who are really busy.
- People would voluntarily form carpools. Better, they would advertise for paying carpool mates on Craigslist, and the minivan owner running it would be able to get gas.
- People who have emergencies, like wife needing to go to the hospital to deliver a baby, could get gas to do so.
- Ditto emergency services, fire, ambulances, cops
- Gas stations would have bought generators, so they could pump and sell gas at a big profit when the power goes out.
- Gas stations would buy said generators now. (We need to get rid of gouging laws on the generators too, so that gas stations needing generators can pay through the nose to get them, instead of someone who wants to recharge his iphone.)
- People who don’t have to go anywhere would siphon their gas and sell it neighbors. Or second-car gas.
- They’d siphon their lawnmowers too.
- People would rent tanker trucks, drive around the northeast, buy gas and resell it in NY.
- Actually, people might get a bunch of gas cans and drive the gas in from rural areas in the back of pickups. Not sure if this is a good idea, especially for smokers, but it would improve gas supplies.
- Exxon would have spent the money for more storage tanks in NJ, ready to sell gas at high prices in an emergency.
Gas price contest
John H. Cochrane
Tue, 13 Nov 2012 02:13:00 GMT