But then came the unnatural disaster in the form of the government’s response. This is where the real catastrophe begins.
Check out the mess in New Jersey. The New York Times reports that “widespread gas shortages stirred fears among residents and disrupted some rescue and emergency services as the New York region struggled to return to a semblance of normalcy after being ravaged by Hurricane Sandy.”
. . . .
Gov. Christie himself has made it clear: “We will not hesitate to impose the strictest penalties on profiteers who, in direct violation of our consumer protection laws, seek to capitalize on the misfortune of others in the midst of a crisis and recovery period.”
Even more absurdly, “The state had set gas prices at $3.59 on the highways last week,” reports the Times.
It’s serious. Last year, merchants paid huge fines for raising prices more than 10% in an emergency. This means that they cannot respond to changes in supply and demand. A disabled price system means chaos. When the price is too low, producers drop out and consumers overutilize. Scarce resources are not being replenished, and those that exist are being irrationally squandered.
That’s why price ceilings mean shortages. Gas shortages cause social disasters. We are seeing this in real-time in New Jersey. It’s a man-made disaster caused by stupid government officials, elected officials, and bureaucrats.