The Major Failure in Post-Sandy NYC is the Free Market: Gasoline

[alcibiades_mystery]

"Ironically" - or rather, completely to be expected - the one function left entirely to the free market is producing the gravest post-Sandy crisis. The planning, provisioning, delivery, and distribution of gasoline is a free market function, even in post-disaster New York. No government agency is in charge of the gasoline supply to the local stations. Rather, the gasoline/oil industry has been left entirely to its own devices, and it has produced chaos.

If you want a glimpse of what a "privatized disaster relief" effort favored by Mitt Romney would actually look like, take a peek at any gas station in the five boroughs.

So, should federal, state, and local authorities nationalize or otherwise take charge of the gas supply?



A question for the free market purists.

[postulater]

1. The free market should allow for unrestrained prices

based on supply and demand.

Are the prices rising for those lucky enough to get gas?

People who need gas would get slammed in the face with that reality. Then let's see if they still want privatization.

[Barack_America]

2. Bring in the Army tankers. 2-3 gallons for everyone, to get them out of the city.

Let the station owners squawk about it.

[brooklynite]

11. "Get them out of the City"?

People seem to ignore the fact that this wasn't Katrina, and people WEREN'T EVACUATING THE CITY. At most, they were moving a couple blocks inland, and had access to public transportation for a considerable period beforehand.

[Barack_America]

17. Not beforehand, now.

I thought the thread was about gas shortages after the storm.

With public transportation in affected areas crippled, people will need gas to get themselves out. The gas shortage obviously doesn't affect people with family within walking distance.

[brooklynite]

21. Same point

MTA has bus service running City-wide, and there are shelters and food distribution points outside the evacuation zone

[hoboken123]

22. I don't think people are leaving

Where would they go?

Isn't power supposed to be coming on in NYC this weekend?

[progressivebydesign]

27. Or u could be like that Dina person from HGTV who tweeted how she filled up her "cars"

before the storm, from her mansion on Staten Island, which lost power for only a day.. who is now "sobbing" on twtter because no one is "saving" her and her neighbors who didn't evacuate from the storm.

[JHB]

28. I don't need to leave. But the people I know out in the 'burbs...

...are all mentioning the lines for gas. Even the ones who knew enough to top their tanks (and gas cans for any gas-powered generators/saws/tools etc.).

[exboyfil]

3. Are there profiteering laws against setting

high gas prices? If not then it is a free market. Other aspects of free market would be distribution by private citizens of gasoline from trucks (lets say gas cans in a large pick up or somebody with a tanker for example).

This is why when people get upset about $10 bags of ice they don't realize that it is just private citizens buying the ice retail and bringing it to the area. It may seem like being a vulture but it does provide for a need.

I do agree with your point that a free market can only operate in an underlying infrastructure. Buying gas from some guy on the corner is risky (how can you be sure it is pure for example). It is also dangerous to handle large quantities of gas in that fashion so the externalities of that danger are not priced into the market.

[Lefty Thinker]

6. And if you buy from a truck

Don't forget to check that the Dept. of Weights and Measures (or whatever New York calls it) has certified their measurement system or you might be looking at short gallons.

There's also the same reason I don't eat at taco trucks (or other food trucks) -- it's too easy for them to relocate to a different area if they cause problems for their customers (food poisoning, short measures, bad fuel, etc.). Reputation is a lot stickier for vendors who have to stay at one location.

[exboyfil]

10. Reinforces our argument that government

provides the necessary tools for commerce to exist. Libertarians seem to forget this. We could never have such a large complex society with no regulation/oversight.

Good point about the mobile food stands. I made that point with my daughter about buying mushrooms at a Farmer's Market. Most things I will buy there may make me sick, but mushrooms can kill you quickly. Unless you know who is selling the mushrooms you really should not take the risk unless you have knowledge about your purchase.

[Atman]

9. There is probably a law against it, especially in NY.

Seriously...think about all those warning labels on gas pumps. They're there for a reason. There is probably some law about distributing gasoline into unapproved containers, especially from a truck on the roadside. If this is the case then some lawmaker has to get an order passed suspending the law/regulation. Then, when some asshole shows up smoking a cigarette and the truck blows up, there will be a million-dollar lawsuit.

Everything sounds simple until you dig deep into why things are so fucked up in the first place.

[exboyfil]

12. The law serves to price the externality

Thankfully. I agree with you guys in pick ups running around selling gas is a very bad idea.

Regulations suck don't they (sarcasm).

[Strelnikov_]

4. Redundancy reduces profit, so redundacy will not be provided

unless regulated.

The US, and global, energy infrastructure is concentrated into a relatively few critical facilities.

The dependence on the Colonial pipeline being one of those 'knickpoints'.

[HereSince1628]

14. I think that's basically right. No back-up generators in most gas stations because they aren't

usually needed. Electrical service is so dependable it's assumed that it will be there when it's needed.

The gasoline problem seems mostly like a lack of electricity for the pumps problem, both at the retail and wholesale levels.

I've never been in emergency management, I don't know if towns and cities designate some gas stations for emergency service and then help with things like financing or providing back-up power.

[Atman]

29. Our town's maintenance facility has its own "gas station."

No traditional pumps. Just big-ass tanks that work on gravity. We're out in the boonies, so we kind of count on power going out during winter storms. For a small town, I'm actually impressed at how prepared we are. Even have huge solar panels to power town facilities. Of course, I suppose it's easier when you only have a few thousand people, not a few million.

[Bonhomme Richard]

5. My son, who lives in Mahwah NJ, called last night to say....

that they were going to come and spend the weekend because they don't have power yet. We invited them and his wife is 7 months pregnant. His big question to me was how is our gas situation (I'm in CT). There is very little where he lives and I was shocked. They didn't have any flooding out their way and I guess it is all due to the loss of power. I told him that we have no issues at all. He said the lines out by him were insane but he has enough to get to our place.

[hoboken123]

25. There's no gas, it makes complete sense

How would gas get to Mahwah? It's normally driven on trucks that are supplied on the Jersey coast by boat. Boats can't get in.

[slackmaster]

7. One of the most important things a person can do to prepare for a disaster is to fill up the gas...

...tank on any vehicle that may be needed after the storm.

People who didn't do that and have been caught without fuel now have only themselves to blame.

[brooklynite]

8. Of course not

The insinuation is that the Government would handle gas supplies more fairly AND EFFICIENTLY than the private sector, for which you offer no evidence. The problem is that existing supplies can't be pumped, and new supplies can't be delivered in the aftermath of a hurricane. Explain how a socialized energy sector would be handling this better.

[lindysalsagal]

13. It stretches far beyond the boroughs: hour north of NYC is still without gas

I just called my hairdresser in ardsley (south of white plains) and she said to make sure I came down with enough gas to get back: There isn't any in westchester county.

This county is alot like beverly hills: It's a rich bedroom community for NYC. So, they can't pump gas because the power is still out.

Huge fail.

[slackmaster]

15. The biggest failure is the failure of people who are now out of fuel...

...to plan adequately for the storm's effects.

[hoboken123]

26. It's not the power issue

There's no supply.

[kentuck]

16. Excellent question.

And the onus should be put on the oil companies and the "free market" so long as this crisis lasts. Now they will want to blame the "government".

[cthulu2016]

18. This is just about the worst possible example

Any station that cannot pump because power is out is certainly not showing a failure of entrepreneurial imagination. The power is out.

Any station that cannot get gas supply because of anything to do with roads is not showing a failure of entrepreneurial imagination. The roads are closed.

Any station that takes extraordinary steps to meet demand will be the lead story on the news for "gouging," and depending on the locality may face legal sanctions for such, so there is no long run benefit to trying to meet demand today.

With the extreme demand in place, any gas station in the area would buy/rent a generator at any price, and buy truckloads of gas at any price, and price the gas according to those extraordinary costs.

Why do you think they do not? What are you suggesting? That the private sector doesn't like money? What is the evidence for that?

At $10/gallon there would be no supply problem at all that was not attributable to failures of public utilities (electricity and roads) so you couldn't pick a worse example of a failure of the free market.

There are plenty of trucks laden with gasoline in Maryland, Delaware and Pennsylvania that will drop whatever they are doing and head anywhere in New Jersey they can drive to to sell that gas to a functioning gas station at $9.00/gallon wholesale.

People's opposition to "gouging" is akin to medieval opposition to lending at interest. It arbitrarily expects a service to be magically provided at substantially below the real value of the service.

[A HERETIC I AM]

20. Your statement in the 7th paragraph is not accurate.

There are plenty of trucks laden with gasoline in Maryland, Delaware and Pennsylvania that will drop whatever they are doing and head anywhere in New Jersey they can drive to to sell that gas to a functioning gas station at $9.00/gallon wholesale.

The price applicable to fuel already onboard a tanker was determined at the rack where it was loaded and can NOT be arbitrarily changed by either the driver or the carrier.

I understand the point you are trying to make, but the gasoline distribution industry doesn't work the way you are suggesting. The carriers have contracts for specific stations and brands and the overwhelming majority of fuel tanker trucks are "Day cab" operations, so they are not out on trips longer than about 250 miles from their home terminal. Most trips are way less than 150 miles.

[cthulu2016]

23. Yes, I do realize their cargo is under contract

I was speaking in shorthand terms about a wholly unregulated market but not thinking that the drivers would go rogue, but that the owners of the cargo would opt to direct it (however direction occurs) elsewhere.

For instance, existing obligations could be bought out by paying the stations their retail price +5% for the load. Particularly those independent stations would jump at making more for being closed than being open.

In practical terms, I am sure there are also many regulations covering gas deliveries, also. Gas in Maryland probably has to jump through many hoops to become gas in New Jersey. But those are government hoops.

[alcibiades_mystery]

36. Fine, me and FEMA and the feds are all wrong

I'll take it!

http://www.nytimes.com/2012/11/03/business/military-to-deliver-fuel-to-storm-region.html?emc=na&_r=0

[B2G]

19. How could the government do any better?

The issue isn't a gas shortage. It's getting the gas to the pumps and hoping the stations have power to pump it...which about half of them don't.

[alcibiades_mystery]

32. We're about to find out

Military to Deliver Fuel to Storm Region

http://www.nytimes.com/2012/11/03/business/military-to-deliver-fuel-to-storm-region.html?emc=na&_r=0

[kentuck]

24. a good time to ask the question?

Both government and the private sector are mostly unable to handle a crisis this large. It will take everyone to cleanup and fix this disaster. However, if you had to choose one or the other to help you during this crisis, would you choose government or private secrtor?

[progressivebydesign]

30. Are Americans too impatient? Unable to cope with crisis?

Sometimes I wonder. This was a once in a lifetime storm, a major natural disaster. With all of the previous snowstorms and Nor-easters in that area, this eclipses them all in terms of paralyzing the most densely populated area in the Country.

But I get this sense from the people screaming on twitter and on camera, that they don't get it. They want everything back to normal in a day or two. They can't accept that they don't have power, that it's impossible to get gas pumped when there is no power, that lines are down, that the electric companies have to fix things before they turn on the power. Etc.

I've lived through major earthquakes, I've lived thru two ice storms where I was without power for 6 days, unable to leave the house, no furnace, and temps in the house around 30. It was awful, but I understood that the govt and utilities can only do so much, so fast.

I have to wonder about all this rhetoric that Americans are "so resilient" when it seems quite the opposite. The Japanese were resilient in their recent horrific crisis. No looting, no screaming at TV cameras, no refusal to evacuate then blame others.

Things cannot get back to normal in a few days, regardless of anyone's intervention, when you're dealing with something of that magnitude AND the population concentration there.

I was seriously amazed by some of the tweets I saw last night. On the account of some "Dina" person who used to be on one of those "Housewives of... " who is now on HGTV. She is mega rich and lives on Staten Island. If you look at her tweets from the past 72 hours... she's like "oh, i just lost power (30th) thought I'd get thru this easily" Then for a day or so she was tweeting halloween jokes as her power came back on in less than 24 hours. Then she tweets that everyone laughed at her when she filled all her carS with gas before the storm, and now they're not laughing anymore. (of course she lives on an island and didn't evacuate.) THEN she posts that she's watching reports about Staten Island (from her home there) and "SOBBING!" and "why isn't anyone helping us???"

How could people not know to evacuate and prepare when they live on an island and a major hurricane is coming?? THey had tons of notice.. tons.

[malaise]

34. It's not Americans

Jamaicans were abusing the power company within 24 hours.

[alcibiades_mystery]

31. I guess we'll get to test out some of the free market theories on this thread

Military to Deliver Fuel to Storm Region

http://www.nytimes.com/2012/11/03/business/military-to-deliver-fuel-to-storm-region.html?emc=na&_r=0

John Stossel think plain old price gouging will solve the problem of lines. We're about to see the government solution.

[malaise]

33. Well FEMA is not putting up with this shite

http://www.democraticunderground.com/10021696384

[alcibiades_mystery]

35. Yup...just posted that...notice that I posted the OP this morning

FEMA probably should have seen this coming, but the scope of the gas crisis was certainly unexpected.

I credit them with this move now.

I'm actually seeing many of my friends reporting stations coming back on line in northern Queens, though still long lines everywhere. Get the damn army on it for sho.

Free market my left ass cheek.

[malaise]

37. I've been following the aftermath on WPIX

and they really discussed the gas problems extensively early this morning.
The ports were severely damaged and several containers were in the water so it was too dangerous to bring in the barges and ships with fuel - add to that the fact that terminals were also damaged and gas stations without electricity could not pump gas.

The question is why didn't gas stations have generators to pump gas. That's the one that they could have controlled and they would have attacked the government for similar incompetence.
They can't be blamed for the other factors.

What I'm sure about is that the Federal government better remain involved in disaster management.
In fact citizens ought to fight for a Constitutional amendment on this one because the disaster vultures can smell riches.