Hundreds line up for $1.84 gas

[CaseyJones]

http://www.mlive.com/business/mid-michigan/index.ssf/2012/10/hundreds_line_up_for_184_gas_a.html

[ronpaulfollower999]

The group said that the $1.84 per gallon price reflects the cost of gas in 2008, before President Barack Obama took office.

I so hate this. I guess people forgot about the $4 gas in the summer of 08, before the collapse.

[MoneyWhereMyMouthIs2]

Actually, what this demonstrates is an interesting economic concept.

If good are not allocated by price/money, they will be allocated by something else.

This is the same reason why price ceilings on inelastic goods like gasoline will create huge lines. It is illegal for people to pay with money (like a normal functioning market), so instead, they are forced to pay with time. (waiting in line) Good and services will be allocated one way or another. In this case, the people with the most idle time pay less for their gas. Good? Probably not. If you're an executive who needs gas, you might have to pay a lower paid employee to go fill your car up because your time is valued higher than the discount. (which is not true with what you are paying the employee.)

In a normal functioning market, a shortage causes a rise in price. If you flop a useful price ceiling on it, that shortage gets paid for in some other way... in this case, it is paid for (allocated) on the basis of people having free time on their schedule, and that free time being worth less than the savings they are getting.

[Zippyjuan]

I so hate this. I guess people forgot about the $4 gas in the summer of 08, before the collapse.
Yes, gas went to $1.84 because the economy tanked and nobody was buying very much of it. As things have improved from the bottom of the collapse, so has the demand for gasoline and its price. Same thing would have happend if Ron Paul was president at the time.

[Carehn]

Actually, what this demonstrates is an interesting economic concept.

If good are not allocated by price/money, they will be allocated by something else.

This is the same reason why price ceilings on inelastic goods like gasoline will create huge lines. It is illegal for people to pay with money (like a normal functioning market), so instead, they are forced to pay with time. (waiting in line) Good and services will be allocated one way or another. In this case, the people with the most idle time pay less for their gas. Good? Probably not. If you're an executive who needs gas, you might have to pay a lower paid employee to go fill your car up because your time is valued higher than the discount. (which is not true with what you are paying the employee.)

In a normal functioning market, a shortage causes a rise in price. If you flop a useful price ceiling on it, that shortage gets paid for in some other way... in this case, it is paid for (allocated) on the basis of people having free time on their schedule, and that free time being worth less than the savings they are getting.


NICE POST!

[MoneyWhereMyMouthIs2]

NICE POST!

Ty, besides my spelling errors.

Read my post Zippy, because I bet you missed it while you were posting.

This is also an example of something that bothers me in this forum in general - The idea that austrian economics and "mainstream" economics are completely different things that are some how diametrically opposed to each other. Austrian economists would predict this same outcome through philosophy while "mainstream" economists might actually put accurate numbers on their predictions.