Mayor Bloomberg continues to befuddle the mind with his persistent lack of the most basic laws of supply and demand when he says such absolute economic nonsense like this:
Bloomberg said the [gas] rationing is “the best way to cut down the lines and help customers buy gas faster.”
No, no, no, and no. Especially 9 (!) days after the super storm struck. This is an absurdity. It will have the exact opposite effect.
Prof. Don Boudreaux absolutely eviscerates any arguments in favor of gas rationing (in reference to New Jersey’s similar plans).
By enforcing anti-price-gouging legislation, New Jersey governor Chris Christie adds to the devastation inflicted by hurricane Sandy (“N.J. Attorney General goes after price gouging in Sandy’s wake,” Nov. 3).
Prices kept artificially low – prices forcibly prevented from reflecting the reality that gasoline and other staple goods are in unusually short supply – discourage the extra efforts required by suppliers in times of natural disasters to bring much-needed inventories to market. And in return for this dampening of efforts to increase supplies, New Jerseyians receive no off-setting benefits. Quite the contrary. At a time when being with family and neighbors is especially vital, price controls cause desperate people instead to waste hours waiting in long lines at gasoline stations and other retail outlets.
The controls also elevate the role of luck over need – need as expressed in willingness to pay higher money prices – in allocating now-more-precious resources. Those lucky enough to get to gasoline stations early (or, now, lucky enough to have a correct digit on their license tag on days when they most need gasoline) – those lucky enough to own or work at gasoline stations and other retail stores – those lucky enough to have business or political connections that can be exploited for special favors – those lucky enough to be skilled at dealing in the black-market – those and other similarly lucky people get disproportionately large amounts of staple goods now in short supply. People less lucky get disproportionately smaller amounts.
Only someone who believes the extraordinarily dubious proposition that such luck in times of emergency is apportioned more fairly than is ability to pay higher money prices for staple goods can even begin to justify further clogging supply lines with price controls.
Emergencies do not suspend the laws of supply and demand.
I had wanted to post something about this last week, but it was too fresh in my mind, as my parents were stuck in Staten Island with no power. My dad, eventually, had to wait three hours on line to buy gas. People, who should be focusing on other things after an emergency are forced to wait hour after hour after hour on line to buy gas. Many people, while wasting their time on line, ran out of gas. Gas stations ran out of supply when deliveries did not arrive. People drove all over the island, based on rumors of gas deliveries. Fights began in places where gas was available. Police officers, who should be helping people whose lives were devastated, are forced to stand guard at gas stations to ensure order.
And in addition to making it tougher to buy gas, New Jersey took policies to further restrict access. In New Jersey, amazingly, the Attorney General sought to crack down on people who brought gasoline from out of state to sell it on the black market. New Jersey refused to relax their asinine full-service-only policy, which further slowed down the provision of gas.
I could go on, but you get the point.
With people like this in charge, it’s a wonder why the city was so unable to respond to this disaster.
In fairness, this comment by Governor Cuomo is fantastic, but he can’t possibly mean to decry public utility monopolies:
“You know how people criticize government? And they say it’s just big and it’s bureaucratic and it’s not accountable? Government is actually accountable, at least to this extent: You can fire the person who runs it … You’re unhappy with the state government, you fire me, that’s what happens … You’re unhappy with the utility company? Who do you fire? By the way who is the utility company? Who runs it? Who owns it? What is it? Where do you get them? They’re this nameless, faceless bureaucracy that is a monopoly that operates with very little incentives or sanction.”
This is an argument against the entire unelected administrative state. Cuomo, who in his day was a very active Attorney General, and before that Secretary of HUD, was the face of a number of faceless bureaucrats. I gather he did not mean what he said here.
Update: Some history of the last time NYC imposed an odd-even rationing system during the oil shortages in the 1970s.
Mr. Carey had been under pressure from Mayor Edward I. Koch, who called the gas lines and supply problems “intolerable.” That mirrored the situation five years earlier, when Mayor Abraham D. Beame called the outlook “desperate” and threatened to start allocating gasoline himself if the state did not.
The governor at the time, Malcolm Wilson, initially resisted, saying he did not want to force “governmental regulation upon our citizens and upon our businesses until every alternative has been exhausted.”
He relented in February 1974, saying the gasoline emergency was endangering public health and safety.
Mr. Wilson ended the odd-even plan in May after federal energy officials increased the amount of gasoline available in New York.