Posts by Dismal Soyanz
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Yes. I did read RB's response in that light Matthew,.and I wasn't disagreeing with him in the least. Just elaborating on the irony of the call for a market-price based response in contrast to an actual market based response.
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OnPoint: On Price Gouging, in reply to Russell Brown,
How terribly irrational.
Sometimes PR works to the benefit of consumers. In this case, the oil companies want to be seen to be doing their bit for Christchurch. Somewhat ironically, this the market at work - not wanting to destroy goodwill (and thus future sales) for the sake of short-term profits.Given the recent (in terms of decades) history of high profile problems with oil companies around the world, the oil companies are likely putting considerable effort into making sure that they do not incur bad publicity.
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OnPoint: On Price Gouging, in reply to Alex Coleman,
If the idea is that prices are the most efficient way of finding out who really needs the stuff; and if you need a govt subsidised work around to make sure that the people who really really need the stuff can afford it, then the idea is a bit broken. No?
Yep. Typically the concept of transfers is used as a means to compensate for the higher price. But in this case, it is just not feasible.
If that makes any sense at all, then the defences of gouging start to look like reasons for the wealthy to avoid sharing the inconveniences of the broader population.
Which is kinda the point Keith made. Price gouging hurts the wealthy less.
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OnPoint: On Price Gouging, in reply to Ben Winters,
if prices spike, no phone calls are required – doubtless the media will report $4 petrol.
So suppose you are a consumer and your local petrol station ups the price to $4. You know that there are two or three other stations within 5 km radius of your home. How do you know which ones are "cheap"? No - not really disingenuous - you just missed my point.
the general proposition that higher prices encourage supply, in and outside a crisis, really shouldn’t be that hard to see
Assuming all the issues as to obtaining a commercial load of fuel, getting a mode of transporting the fuel, finding out where the prices are high, and the service station owner-recipient is convinced that the arbitrageur is selling kosher fuel are resolved, then yes - a higher pump price might encourage an arbitrageur. But as BenWilson pointed out, would there be any meaningful impact? How many tanker loads wold it require? How many tankers would be required to push the price down? Over what time frame?
This all assumes that prices have gone up. Any meaningful lift in supply would have to come from the big oil companies. Although the big fuel companies may have a bad rap for lifting prices during normal times, it would be extremely bad PR to allow their own company owned-company operated stations to up the price and then bring in more after a few days. [I still don't buy BP because of the Gulf of Mexico.] And the same applies to independent station owners - the backlash they would get for raising prices would be fairly harsh.
So it's possible - yes. But it isn't likely
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Doh.
I just realised. The minitanker availability is a non-issue because
Hoarders = arbitrageurs
Problem solved.
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OnPoint: On Price Gouging, in reply to Ben Winters,
Mobile phones worked throughout the crisis in many parts of Christchurch, if spottily.
Seriously, you are suggesting that people would use their battery power on finding out where the cheapest petrol is?
What is so hard to believe about people who have mobile tankers using them in a crisis to buy petrol in Kaikoura or Ashburton or Dunedin and driving them into Christchurch? I don’t personally own one, but they exist. Is it really so hard to believe willing buyer cannot find willing seller in those places?
You are assuming that the arbitrageurs also have knowledge about where the high price locations are; that they are confident that they can get into those areas (safely); and that potential buyer has access to the relevant information as to quality of the product. Sounds like a big ask to me.
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OnPoint: On Price Gouging, in reply to Ben Winters,
Over short distances (and especially if there the road is stuffed), walking is the obvious choice. But over longer distances, I am pretty sure that I would pay whatever it cost (up to whatever cash I had on me). And this is where we part company. You say people will self-select. I would contend that the self-selection becomes extremely narrow.
If the only difference between me and my neighbour both wanting to get across town to check on family is the size of our wallets, then obviously the richer will win out. That will not select the most needy.
The only way of justifying the pricing argument is to say that it would cut down on inessential travel. That I agree it would do. But the extent to which it would have to rise to deter the many who believe that their travel is essential to help others or even simply to leave would need to be much more than double methinks.
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OnPoint: On Price Gouging, in reply to Ben Winters,
Practically speaking, how is that information going to be disseminated? There are no phone lines/limited mobile coverage, no power, no internet access.
And just exactly how are going to arbitrage? You can't arbitrage between petrol stations unless you own a minitanker and the station owner trusts your dodgy scrawled note that this is the real mccoy.
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OnPoint: On Price Gouging, in reply to Sacha,
You do know that not all economists are indentured to the government, right?
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OnPoint: On Price Gouging, in reply to Ben Winters,
It’s not a supply side issue. Knowledge of price differences would be pretty hard to disseminate. And supply is pretty inelastic as well given the short time-frame we are talking about.
Given the perceived (if not actual) need for having fuel as soon as possible, I don’t believe many would think that driving across to other suburbs to fill up is a realistic option.
Government aid is not really relevant. Setting up transfers takes more than a couple of days, by which time supply is likely to have been restored.
While there are other things people would rather be doing than queuing, they would also have other things they would want to spend their money on.
This is not my typical field but I would suggest that during periods of trauma, equity and fairness become hugely important. Making everyone wait (or only receive a fixed amount) regardless of their wealth would meet this.
[ETA: Price signals in this case might work on demand but not on supply. And that might is only likely to be on the sightseers. If you need to get across town to check on your family, you will do it, whatever the cost.]