Gas Lines and Empty Shoes

A primer on gas lines for those too young to remember the 1970's.

To begin, remember everyone has a routine. That includes when and where to gas up--what's your trade off between having the security of gas in the tank and the hassle of refueling? Do you believe in "just in time" refueling or do you always want half a tank just in case?

The answers to those questions determine how many gas pumps we have and how much gas stations keep on hand.

The routine also determines routine consumption of gas, how many miles we drive.

Now throw a hurricane or an OPEC embargo into the picture. Suddenly everyone gets a little worried, so we all start refilling a little sooner, i.e., a little more often than we used to. That means the supply of gas pumps is not enough, so we start seeing lines. Then there's real scarcity in places. That increases our anxiety. The existence of lines proves that gas is in short supply, so everyone gets really anxious and refills every 50 miles.

That giant sucking sound is the preexisting gasoline stockpile slurping from gas stations into gas tanks. Now there are real shortages and real lines. But the lines don't affect demand for gas, at least not directly. Gas lines raise the price of gas by throwing in costs of time and aggravation.

Gas lines vanish when everyone has gas in their tank at their new comfort level so they stop refueling so often so the supply of pumps rebalances with the demand.

(The foregoing suggests that lines are a creation of panic, which they are and Malcolm Gladwell may or may not have discussed the phenomena in "Tipping Point". Real shortages are solved by higher prices, both in dollars and in time, which end up reducing the amount of driving.)

The empty shoes and sandals on the Baghdad bridge remind that panics can occur everywhere and any time multiple people have to interact. Gas lines remind that Adam Smith's "invisible hand" has limits: our interacting routines are an example of the invisible hand working; our gas lines are an example of the failure of the invisible hand.