Comment: High prices attract supply

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High prices attract supply

Last decade a pipeline between Tucson and Phoenix broke shutting down 1/3 of the cities supply of gasoline.

I started noticing gas stations closing (bags tied around gas nozzles) At first I figured it was a large maintenance cycle, but then it continued and then everyone took notice and began asking questions. Panic buying ensued and within 24 hours all available gas was moved from underground tanks into peoples gas tanks. Prices rocketed up from $1.30 to (gasp) $3.50/gallon. Long lines still existed but it wasn't more than 45 minutes to an hour in my experience.

As much as I hated our governor at the time (current DHS director)
She kept her hands off prices and temporarily lifted environmental regulations (her arm was twisted).

There was a simmering uproar from people complaining about gouging.
What the complaining public didn't realize was the higher prices were already attracting supply from neighboring cities. The lifted environmental regulations allowed any formula to be trucked in. The crisis resolved itself rapidly. Those that needed gas most were able to get it as some gas stations raised their prices to reflect the capacity of their tanks. Often times $5 or more. Even with the pipeline out of commission enough tanker trucks were able to meet the demand.

When the pipe was repaired a few weeks later prices came down slightly above the national average.
If prices were not allowed to reflect market conditions none of these tankers would have bothered delivering gas and would have prolonged the agony and damaged the local economy.