Monday, September 22, 2008

More Gasoline Shenanigans

The bizarre gas shortages continue, this time in Atlanta. I was able to drive to Memphis, finding gas about 40 minutes west of Nashville (I was concerned because of the Nashville gasoline shortage), but a friend in Atlanta tipped me off that similar shortages are appearing there. 

What the hell is going on? There are no price controls in Atlanta or Nashville. Why aren't stations raising their prices? My friend in Atlanta, Andy Slack, suggested that it may be the result of social pressure--nobody wants to be the only remaining gas station with gas, and a price of $5.00. This is possible, but if it were true, how did we ever get past $3.50, or $4.00? Why didn't we end up with shortages then? And why has this only happened in Nashville and Atlanta? 

As in Tennessee, Atlanta's governor issued a warning to stations not to price gouge. So why are the problems so localized? Albama has a price gouging law, and the governor of Alabama set it into action on Friday the 12th of September. Why haven't they had shortages? Why do Nashville and Atlanta seem to have stick prices in the face of spikes in gasoline demand? 

This is a genuine economic puzzle. There must be an interesting explanation.

3 comments:

Andy said...

My guess: distributors set the bulk price (the $3.50 - $4 range you mention), and individual stations set it 7-11 cents (according to wikipedia) above that. They pick the price that ends in 9 and that's that.

Mike Hammock said...

You may be right. I should call some actual gas stations and ask them why they didn't raise their prices. I could have sworn I'd seen stations raise their prices significantly from hour to hour in the past.

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