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Katrina and gas prices

While people in New Orleans are dying by the hour, people elsewhere in the country, along with mouthpieces like the partisan New York Times and the disgusting Bill O'Reilly, have been moaning about $3 gasoline. Even President Bush warned gas stations not to engage in price gouging.

It's a hopeless cause I suppose, but I wish all of these people would shut up. There is less gasoline for the country to work with in the next weeks (or months), and somehow we must cope with it. The necessity of cutting back on gasoline consumption is a physical fact. Higher prices will change behavior, and sharply higher prices earlier this week would have kept some people from tank-topping and draining the system of valuable gasoline.

Two of my buddies are hauling generators and water to Mississippi today - along with enough fuel to ensure they make it back. The truck is a traveling bomb, in a sense, because political forces don't allow the price system to allocate gasoline properly, and they can't be sure of buying enough fuel while on the road to get back home. Yet every car in town has a full tank of gas. What a waste. The opportunity cost of every five gallon can of fuel in that truck is five gallons of water, and there is no running water where they're going.

Today's newspaper brought the good news that a large local gasoline retailer will donate his profits over the next few weeks to the American Red Cross for hurricane disaster relief.** He's getting my business. Call it "gouging for charity" if you like, but it surely blunts any criticism of the prices at this retailer and, if the practice spread, it might affect the national argument over gas prices.

Then I read an incomprehensible screed on gas prices in the New York Times. The authors largely absolve retailers of guilt for gouging, referring to the higher wholesale price of fresh supplies. But they merely push the problem back to the villainous oil companies. I see: if we can just keep "oil companies" from raising wholesale prices there won't be a problem.

Uh uh. That won't get water to Mississippi. The more you get government in the gasoline business the more that market works like Federal Disaster Relief - not very well.

**My donation went to the Red Cross' Houston Chapter, to assist their work with the refugees.