Government Policies Cause Shortages in Aftermath of SuperStorm Sandy

Shortages are almost never the outcome of market processes.

As such, prolonged shortages are almost always the outcome of a flawed public policy intervention.

Consider the shortages of gasoline in the areas affected by SuperStorm Sandy.

For example, laws against “price gouging” inhibit gasoline stations from being able to raise prices by a sufficient amount to offset the precautionary purchase of generators to provide power to pump fuel from their storage tanks. Being unable to increase their prices sufficiently interferes with the profit motive that would induce them to buy generators.

Another source of the problem is US maritime policy, including the Jones Act that prohibits foreign-flagged vessels from shipping gasoline, diesel & other petroleum products from the Gulf of Mexico to north-eastern ports. This statute dates from the early 20th Century & requires ships be registered in the US, operated by an American company that is managed by & predominantly owned by US citizens with crews that are 50-90% American citizens.

With crew costs the largest single ship-operating cost, the requirement of US crew would put American shippers at a cost disadvantage were it not for the protectionist privileges granted to them. And since ships must be built & repaired in American shipyards that tend to cost at least twice as much as comparable vessels built elsewhere, all Americans must pay more for everything that arrives by ship to the US.

Although there was a temporary suspension of the Jones Act restrictions, the fact is that US citizens are net losers from the granting of special privileges to a particular industry & a small subset of the workforce. While all Americans must either do without or pay higher prices for ALL goods that arrive by ship to US seaports, America’s maritime policy provides large benefits to a relatively small group of workers & industrialists.

Finally, the requirements for the blending of ethanol into US gasoline supplies slowed down the provision of fuels to meet Congressional mandates that were imposed to benefit corporate farming giants like ADM.

Ignoring the need to provide “power to the people”, public policies tend grant privileges to the politically-well-connected.

The best way to end shortages & high prices is to END CORPORATE WELFARE!!!

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About christopher

Content of "Natural Order" attempts to reflect the commitment of Universidad Francisco Marroquin to support the development of a society of free & responsible individuals. The principal commentator for this blog is Christopher Lingle.

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