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.
1 comment:
-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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