Note To Governor - Price Controls Don't Work!
by Vince Daliessio
Apparently Hawaii governor Linda Lingle was absent from public school the day they covered "supply and demand". She has signed into law a gasoline price cap;
Hawaii has become the first state in the nation to set limits on gasoline prices. The state Public Utilities Commission is setting the wholesale price ceiling for gasoline in Honolulu at just under $2.16 a gallon.
Will somebody gently remind Ms. Lingle what happened in the 70's when that was tried?
The caps apply as of next week, when a new law goes into effect allowing Hawaii to set a maximum wholesale price at which gasoline can be sold. The limit is based on the weekly average of spot prices in Los Angeles and New York, and on the U.S. Gulf Coast. The law doesn't put a cap on retail prices.
This will cause even worse havoc than limiting the retail price at the pump, because once the market wholesale price rises above $2.16, the gas stations will literally crank up the price as high as it will go, since their supply will be effectively cut off. I doubt the news will report it, but I'll bet some smart station owner will price his finite supply at $100 per gallon!
Gov. Lingle said she's poised to repeal the gas cap if it somehow ends up costing motorists more. The governor said she would be checking gas price points to see if there are any gas shortages before she makes up her mind about repealing it.
Better have your pen ready, Linda - otherwise Hawaii is going to start going Road Warrior, fast.
Comments
The citizens of Hawaii may not even notice any difference between full-on socialism and the "ism" they've been living under. hawaii is already famous for its heavy regulation of business far and above the impediments already in place via Washington. They are a true welfare state.
Actually, I'm afraid the governor might pull the trigger and rescind the law too quickly, before the masses have a chance to figure out what is happening, and before the results can prove what we Misesians have been saying. A case like Hawaii is a perfect laboratory for this kind of economic experiment.
Don't you understand? Hawaii is the only state in which people cannot physically leave (with their cars) to purchase gas. This is the ultimate power play against the people. However, here are some guys who tried to get around this obstancle.
But wait - don't liberals love the environment? And if gasoline prices are higher, won't that eventually (I understand that the demand for gasoline is relatively but not completely inelastic)cause people to use less of it? Isn't that a good thing? Bottom line is, statists like Ms. Lingle trust their own omnescience more than they trust markets. She has just poked a VERY big socialist calculation problem with a very sharp stick.
I emailed Lew to ask if he'd heard of this. He replied "Yes - the totalitarian impulse is eternal". Couldn't have said it better.
How many exclamation points can I legally put after, "DUH?" I guess she figures Hawaii is an island so no one can escape and ruin her planned economy. Sort of like, say, an Iron Curtain.
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