8/30/2005

hurricane Katrina

Hurricane Katrina has ripped the southeast coast of the U.S. to shreds. Some say that it is the worst hurricane to ever be recorded in that area, with winds reaching up to 150 mph.
Last night as I watched the news I heard them say that gas prices are expected to jump to $3.00 a gallon by the end of the week. The problem is that now that the mass public is going to go to the gas station right now to fill up their cars, the prices of gas a guaranteed to rise. Even if the prices might have remained constant, now that the demand is going to hit the roof, the prices will rise regardless of the hurricane. Thus, we have created a self-fulfilling prophecy.

9 comments:

Jasmine said...

It’s really sad what has happened to so many people affected by Hurricane Katrina. It’s also amazing to see how so many in this country are rushing to help and to offer any type of aid they can. However in contrast, it is times like these that bring out the best in us but also the worst. I am sure that there will be price gouging in gasoline all over the country. Looting is getting out of hand in New Orleans and there were even shots fired on a helicopter that was evacuating people. It’s just going to be interesting to see what happens and how long it takes for gas prices to stabilize and what government action will be taken to protect the average person.

sophia said...

Because of Katrina and the bottle necks created in the oil industry the gas prices would have risen anyway because of a shortened supply. I don't think that it is a "self fullfilled prophecy" necessarily but the media definitley influenced people to run to the pumps by forecasting the rising gas prices. I'm personally glad for the warning by the media because I was able to fill my car before they did go up.

Chloe said...

It's crazy that the gas prices could shoot up like that overnight. I was also happy to hear the news of the gas price soar because it saved me money, and because of the shortened supply of gas, I think the gas prices would have shot up regardless of the amount of people running to the gas station.
I am also happy to see the president taking action in using the oil reserves. They are there for emergency, and I'd say that Hurricane Katrina is an emergency. Hopefully that will keep gas prices stable, but it's hard to predict what will happen.

Liz said...

Hurricane Katrina was a huge disaster that is true. Oil prices have been creeping up anyway and I think president Bush just needed a reason to raise them even higher. While we are all being conditioned by paying $3.00 a gallon, its weird to think that we will be happy to be paying anything close to $2.50 a gallon. You tell me what the real disaster is.....

Dr. Tufte said...

-1 on Sara's post for no link in the post, and on Liz's comment for poor capitalization.

What Sara described is actually a real, and fairly common phenomenon. There is actually a Ph.D. level macroeconomics text called The Macro of Self-Fulfilling Prophecies. And - to correct Sophia a little - the self-fulfilling aspect of it is that prices may rise before the effect of damage is felt.

Price gouging - as used by Jasmine - is a problematic idea. It is a claim that prices are too high coming from buyers. What is to prevent sellers from saying that the old prices were too low because buyers were "anti-price gouging"? This is really a case in which buyers can shout down sellers because there are more of them, not because their position is readily defensible. Is that the way our society should work?

One note about Chloe's comment - there is always a big stink about the Strategic Petroleum Reserve, but it wouldn't get that much attention if people knew how small it was.

And for Liz, the President has little or no control over the price of gas (or oil).

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alena said...

Cool Blog, I never really thought about it that way.

I have a Hurricane Katrina blog. It pretty much covers hurricane related stuff.

Thank you - and keep up the thoughts!

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