No Gas in North Carolina Thanks to Anti-Gouging Laws

by Cord Blomquist on September 12, 2008 · 14 comments

Rad Berky of NewsChannel 36 in Charlotte, North Carolina reports that fears of Hurricane Ike disrupting the supply of gasoline has caused massive runs on gas stations. This phenomenon was brought to my attention by CEI’s Vice President for Policy, Wayne Crews, who is currently with family in North Carolina and witnessing the shortages first hand. Berky reports that:

Even with the higher prices, [CITGO station owner Bipin] Ganhdi ran out of gas by mid-afternoon Friday. He is hoping his next shipment will come Friday night, and he has no idea what it will cost when it gets to his pumps.

He goes on to note a suggestion from AAA:

If you have more than a quarter of a tank of gas, then don’t rush to fill up.
Wait 24 to 48 hours and see what Ike does when it finally makes it to land and the oil refineries

That’s sage advice from AAA, but such advice wouldn’t be needed if price mechanisms were allowed to work freely in North Carolina. Unfortunately, the Governor of the Tar Heel State is trying to wish-away those market forces. The Associated Press reports that:

Gov. Mike Easley has declared a state of “abnormal market disruption” and signed an order allowing the attorney general to enforce North Carolina’s anti-gouging law.

Going on to explain the governor’s economic thinking:

Easley said wholesale prices were up less than 20 cents a gallon and consumers shouldn’t see prices rise substantially more than the wholesale increase.

Easley’s understanding of economics leaves something to be desired. Wholesale prices are, of course, just one component of the price of gas. Certainly local spikes in demand play a part, and that’s not a bad thing.

No AAA warnings would be needed if prices were allowed to rise, keeping everyone but those who absolutely need gasoline from consuming the gasoline that may be hard to come by in the next few days. If prices stay high, it sends a clear message to suppliers to get gas to the Carolinas, where there is money to be made.

Unfortunately for the people of North Carolina their governor missed a few economics classes in school and believes that price controls are the way to go. I hope North Carolinians realize that cheap gas isn’t so great when all the pumps have run dry.

{ 14 comments }

Nancy September 12, 2008 at 5:16 pm: What in the world does GOUGING and your desire to do it have to do with the supply of gas????? That's outlandish! There's a STORM coming for GOD'S sake!!!! This is nothing but a rant about an order NOT to break the laws, moral and civil!!!! Ur crazy…with greed sounds like!
cordblomquist September 12, 2008 at 5:29 pm: Imagine two scenarious, one with and another without the gouging laws:With gouging laws, prices stay low and people rush to gas stations to buy gas before hurrican Ike hits Texas and disrupts gas supplies. Pumps quickly run dry and several services crucial to North Carolina like emergency vehicles, mass transportation, and emergency medical generators are unable to get the gas they need.Without gouging laws people don't rush to pumps as stations owners raise prices in recognition of the disrupted supplies. People who can't afford the short-term price increases take to mass transit, which thankfully was able to buy the high-priced gas as pumps didn't run dry. Similarly, hospital generators and emergency vehicles were able to keep running, albeit at higher prices, but at least they got the gas they needed.This isn't about greed, it's about recognizing that supply disruptions have consequences, and one of those consequences is higher prices. When things are in short supply, some things have to take priority. Prices help us figure out what those priorities are and encourage people to find alternatives to the resources that are suddenly scarce.That's not greed, that's simple economics, and it makes us all better off.
Nancy September 12, 2008 at 5:33 pm: Baloney. They would have bought it ANYWAY….and that's exactly what the article said! They just wouldn't have paid the obscene and immorally priced gas as it is EVEN with the gouging laws!
Nancy September 12, 2008 at 5:34 pm: That's WITHOUT the storm coming and as normally as the price of rip-off fuel.
cordblomquist September 12, 2008 at 5:35 pm: Nancy, glad you're reading the blog and commenting. I guess we'll have to agree to disagree on this point.
Liberty Lover September 13, 2008 at 1:32 am: I couldn't have explained it better myself. To bad people just don't get it. Maybe the people of North Carolina will find out about the Economist running for Governor Dr. Michael Munger and make a better choice for leadership in November.
Nancy September 13, 2008 at 9:08 am: My dad owned a gas station. I also attended business school. I understand supply and demand and just how the gas station business works.
Nancy September 13, 2008 at 9:09 am: Who authorized this gas rationing anyway? Because if the Govenor didn't sign off on it, it too was illegal.
Xaq Fixx September 15, 2008 at 7:43 am: Another wierd part of the story…
I work in Charlotte, live in SC just across the border (you can see NC from my back porch) and the price difference is amazing. By my wife's office in Charlotte it is $6 a gallon, across the street from our neighborhood, in SC, it's only $3.99 a gallon. There is no talk of shortages on our side of the border.
Nancy September 15, 2008 at 8:14 pm: Sounds like they were gouging people anyway….hope they get caught!
kurt September 16, 2008 at 8:02 am: NO such thing as gouging. U should b able to sell it for what ever people will pay for it!
ben_valent@juno.com September 24, 2008 at 6:08 pm: Gasoline Retailers Assoc. is pulling a major scam. How is it that ALL different brands are ALL OUT AT THE SAME TIME? THERE NOT, THAT"S THE SCAM! Last week Im went to a Shellat Potter and 84 in Mathews (Wesley Chapel actually) and the ownerhad little cards over the economy gas and the 89 octane leaving onlythe premium (20 cents more than the economy gas) It was a rip offso I decided to make a selection for the economy gas ANYWAY despite their being a card saying no 87 octane. The 87 octane pumped out just fine. Crooked ba$tards. THEY HAVE THE GAS. THEY JUST WANT TO HOLD ON TO IT TO MAKE YOU THINK THEIR IS A SHORTAGE, THEN THEY ARE GOING TO JACK THE PRICE WAY UP. How could all these different brands that are trucked inon differents trucks ALL BE OUT AT EXACTLY THE SAMETIME? THEY THINK WE'RE STUPID!
Tria Xiong September 26, 2008 at 2:26 am: Why is there no GAS in NC? When do you think we'll probally have our Gas back?How will we be able to go anywhere without GAS?What are we going to do when there is No more gas in the car?
JOHN DOE October 2, 2008 at 10:44 am: THE GOP (GRAND OLD PARTY) NICK NAME FOR THE REPUBLICAN PARTY,WHICH SEEMS TO BE WORKING WITH A MAJOR CULT GROUP, MIGHT BERUNNING DRILLS AND GAMES TO CONTROL. LOOK AT JOHN MCCANE HOWCLOSE THE POLLS ARE, I GUESS I DON' NEED TO WORRIE ABOUT SENDINGMY KIDS TO ANY OF OUR NUMBER ONE RANKED UNIVERSITES I CAN JUSTSEND THEM TO THE ARMY. THE PEOPLE ARE NOT VOTING THIS WAY THISIS A CULT TRICK.