Fuel Rationing Exacerbates Middle Atlantic Shortages

New Jersey and New York have made the problem worse with attempted price controls.

Gas station out of fuel in Washington Heights, northern Manhattan, New York, November 3
Gas station out of fuel in Washington Heights, northern Manhattan, New York, November 3 (Flickr/bee721)

Last week’s flooding and storm damage in the northeastern United States disabled power at oil refineries in New Jersey, causing gasoline shortages throughout the Middle Atlantic region. Government’s response in the state as well as in New York has made the problem worse.

Democratic governor Andrew Cuomo of New York and his Republican counterpart in New Jersey, Chris Christie, ordered the rationing of gasoline and threatened to prosecute station owners who dared raise prices, even if supply had shrunk while demand remained stable. In a free market, prices would naturally have gone up to reflect that reality, incentivizing station owners to truck in petrol from other parts of the country while discouraging consumers from unnecessarily hoarding fuel.

The state governments’ interventions prevented both from happening, thus making the problem of shortages worse.

That isn’t stopping enterprising residents of both states from doing what station owners would have done if they had been free to do so: sell gasoline at an increased rate to consumers who are unwilling to wait in line for hours.

The Independent and Reason.com report that small businessmen in Brooklyn and Newark are waiting in line to buy fuel and resell it at twice the regular price to motorists who don’t have the patience but do have the money. That’s how the market works.