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A recent poll finds that 72% feel that gas companies are doing price scalping in the aftermath of hurricane Katrina. But Rand Simberg discusses how higher gas prices are essential to 1) get the gas to the people who need it, and 2) get people to stop using so much gas when it's in short supply:
With every disaster or crisis, it seems that the public, press and politicians require a remedial course in Economics 101.
...Let's recap, briefly, for those who never took the class, or have forgotten it. It's really simple. In any locality, when the supply of a particular item is reduced with no change in demand, or the demand for it increased with no change in supply, or supply is decreased with a demand increase, prices will go up.
This is a signal to the market. To those demanding the product, it is a signal that the supply is relatively short, and that they should perhaps rethink the level of their demand, if possible. To the suppliers, it is a signal that more of the resources must be brought to market. In both cases, it will result in a change in behavior on both parties that will restore the balance between supply and demand. Moreover, it does so in a useful, quantitative way. It tells the supplier how much expense, risk and effort she should expend to increase the supply. This calculation may even bring new suppliers into the market. It also indicates the degree to which it is sensible for the consumer to change their demand. When by fiat we pretend that the price has not gone up, it's like covering up the signposts, and we shouldn't be surprised when those supplying no longer attempt to increase the supply, and those demanding can't be bothered to reduce their usage of that particular commodity.
Read the whole thing.
Katrina Contributions Near $100 Million:
Charities, U.S. Officials Work to Maintain Level of Donations Over Longer Term
Less than a week after Hurricane Katrina, American giving to help storm victims has surged past the level raised for South Asia tsunami relief in the same period, nearing the $100 million mark, according to charities and experts. But relief groups and federal officials worked to keep the donations flowing from Americans worried about oil prices and the economy.
