Wes Eargle wrote:
Rich Anderson wrote:
Why is setting interest rates (which incidently are the price of a loan) any different than setting gas prices?
You really can't see the difference? Truthfully? Come on now. You're pulling the traditional Rich Anderson make a huge jump in logic, get called out on it then defend it to death argument again.
There is no difference. If the government goes into an area and writes loans at a certain rate, then every bank that wants to do business in the area has to match that rate. While not quite as obvious as telling the gas station owner what numbers he can put up on his board, the end result is the same. You are pulling the traditional Wes Eargle call someone out because of a personal inability to grasp an abstract concept.
jimpastorious wrote:
C'mon Rich, if you are a student of economics you know you are getting way off base. Greenspan simply sets the rate that federal bank will loan money to other banks for. Yes, it sets the benchmark, but not the interest rate for your house, credit card or car loan. The market place sets the actual interest rate. Kind of explains why home rates were dropping as Greenspan raised the fed's benchmark rate.
No doubt, but I did not say that the govenor should set the price. I said that there should be a price freeze. The gas station owners had already determined the price of the gas. The federal loan rate is an attempt to influence the rate at which independent institutions lend money. Price freeze would be the same thing as it would influence the ability of gas station owners to sel fuel based on a price that was previously set. It is more heavy handed, but when time is short and working long duration economic policy means that the boat will have left the harbor before it arrives.
Mike Whitney wrote:
Hey Rich -- I largely agree with you in principle but not in practice. I can't believe no one has found the obvious flaw with an idea like Easley capping gas prices:
If NC capped gas price but all our neighboring states have much higher prices, there is strong incentive for all the gas companies to sell gas elsewhere and short-change "low profit NC". It would happen, and it would make any shortage even worse.
Incorrect. As I stated in the beginning, the freeze would be lifted immediately that supply was restored. There would be no demotivating, as price structures would be normalized immediately that the supply was. If there is no supply, there can be no diversion of gasoline. If there is supply, there is no freeze. The gas in the state is a commodity that was bought at a set price. Freezing the margins of the distributors in possession of it is not going to kill them as they set the price in order to make margin on their original purchase price. All it would do would ensure that the landscaper with 3 trucks and 10 mowers doesn't eat $100 extra over the course of a couple days because he can't change his contracted price.
Les the Libertarian wrote:
I don't believe it was an 11th hour proclamation. I heard projections that 40,000 people were going to die in New Orleans as well, projections are just that projections. I don't think 40,000 people died in New Orleans, at least I sure hope not. If the governor had made the announcement Monday before anyone actually new the extent of damage, that would be irresponsible. He made the announcement once things were reasonably clear that there were going to be supply problems. As for the announcement accomplishing nothing, I am once again forced to dissagree, it has fuel consumption at the front of everyone's minds and has millions of people making choices that limit fuel use, exactly the intended goal.
It was 11th hour. I knew about gas supply disruptions and began tracking data on this stuff by mid-day Monday.
Me at 11:44am on Monday wrote:
Since the hurricane covers a large percentage of the country's refining capacity, this would not be a surprise at all.
Since some of the data I got was .gov sites, I pretty sure Mr. Easley and crew could have done the same. I was preparing a press release on gas conservation on Wednesday morning. If they didn't know, they should have. At the least, they should have issued a precautionary warning on Monday and then, in light of public response, formulated an action plan. Not doing so is as stupid as not putting salt or sand on the roads before a ice storm is predicted to arrive. It may not be a 100% certainty, but with enough indicators bearing down on you, erring on the side of caution is a good thing.
***EDIT***And while I was typing all that, Mike makes a post to show it is all a moot point.
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