Sheep in a panic.....
Want to guess what happened? Stations began running out of gas. Not because of a shortage but merely because people were panic buying more than usual. So of course word flashes out that the stations are running out of gas setting off more panic buying. Now let’s look at economics. Supply and demand. There is a limited supply of gas in the state right now and massively increasing demand throughout the day. What happens when demand increases and supply doesn’t? Prices go up. In my home town on Monday gas prices were between 2.49 and 2.52 per gallon in the afternoon. As word of Katrina’s severity spread they jumped to 2.64, by Tuesday morning, by Tuesday evening they were up to 2.72. As today’s panic went off they have jumped to 2.99. In parts of Atlanta it is reported that some stations were selling gas for 5.00 per gallon!
See how it goes? Totally false rumors spread that the state was going to be OUT OF GAS spread causing people to rush out and buy lots of gas, causing stations to run out of gas, causing more people to rush to other stations to buy gas causing prices to skyrocket. Panic is such a wonderful thing. People are such sheep.
The Governor has issued an executive order to punish stations that are price gouging. I wonder how well that will work. How much did your gas jump in the last two days?
Update 1 Sept. - This morning I went out and at several of the gas staions in town the price had gone up .50 overnight. 3.49 a gallon now. And the headline in the local paper is about gas panic and the false rumors that we are going to run out.