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by kristjansson·5y ago·view on hn ↗
The argument goes that if prices were unbounded above, demand would drop, and suppliers would move heaven and earth to deliver more to take advantage. No one fills their tank ‘just to be safe’ if the gas is $50/gallon; if they really could charge $50/gallon the oil companies would have private road clearing crews and tanker trucks outfitted like storm chasers? I don’t know.

While such a policy might maximize economic utility I think you’re correct that it’s advocates gloss the obvious physical - but also social - constraints.

Sometimes gas (or whatever) just can’t be delivered for any price. Since demand obviously drops off with price, it’s hard to believe suppliers could justify mammoth investments in delivery infrastructure.

More importantly, such a policy means rationing a essential resource proportional to wealth. Those with the most get what the need; the well off get a little at a painful price; those struggling under normal circumstances just go without. The argument does that a little at a painful price is better than none at a artificial price. I think that misses the size of the lattermost group, and the risk that expressing a fundamental inequality between humans during exigent circumstances - that if you don’t have money, you can’t have gas or heat, or whatever it is - puts social cohesion in jeopardy. Rationing resources either by explicit (1 gal per customer) or implicit (first come first served) policy might be economically inefficient, but socially expedient

2 comments
Rationing and anti-gouging laws prevent supplies rushing in. A lot more people suffer as a result.

Rationing is particularly stupid because then the supplies are not going to those who need it, they are wasted on people who don't need it. WW2's gas rationing created a thriving (and very illegal) black market of people selling their gas rations they had no use for to people who did. A whole crime industry grew up around this, complete with drive-by shootings.

So how can you get the benefit of price-surge based supply without the social-inequality disruption? Minumum subsidized purchases (like first gal costs low-$, more at market rates)? Direct-to-citizen cash payments? "Community based purchasing" - local towns buy what they need, at market rates, but they get massive federal cash influxes to enable them to do so? I'm sure I'm missing something here, but probably there is some mix of tradeoffs that could bette make this kind of thing work.