However, I think the more pressing concern is going to be if, and how, the government mandates a curb in consumption in the short term.  Katrina has truly damaged oil production and refining, as well as curtailed already limited gasoline supplies (see post below about potential problems in Atlanta).  The assessments of the damage are still coming in, as we have seen in the posts below.

A release from the SPR is a near certainty.  There's no reason the president will not do this, if only to appear as though he is doing something.  But, remember, what is in the SPR is not refined if there's no available and unused refining capacity, there's nothing to do with that oil.  

So what do you think?  Will the SPR release be enough?  Is it appropriate?   Will the government have to somehow resort to rationing?  (Things are bad, but are they that bad?)  Will rationing be a federal, state, or local matter?  Is rationing really that bad? Well, here's some pieces on rationing from WW2 (hat tip

Link 1

Link 2

I know it might be a little early to talk about this idea, but after hearing about all of the logistical nightmares, (which sure, we will adapt to after a while) I think rationing is a potentiality, especially for the area that is fed by the tanker ports, refineries, and pipelines from this area of the Gulf.

Whether or not it is the right option for our government to take, well that's another question...would Americans go for it?

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I'm old enough to remember the gas lines back in the 70s. The reason for the lines is that we had price controls on gasoline. Price controls lead to shortages. Gas stations would run out of gas and you had to drive around to find one that was open, then wait in a long line to get gas.

I remember one time I was driving and driving looking for a station that had gas, until I finally ran out. My engine died and I had to park. I left my car and carried a gas can to a nearby gas station, went inside and asked if they knew anywhere I could get gas. The station attendant admitted that they did have gas, but only a little bit, so they didn't want to open up because people would line up and then be angry when the station ran out before they got to the front.

He took pity on me and let me fill my gas can, but he led me out to the pump and we both had to crouch down behind the pump so that we weren't visible from the street. "Make sure nobody can see us," he said. "I don't want to get mobbed."

That's how it was back then. Black market transactions, people doing and trading favors, having to waste hours waiting in lines. It was like something out of the worst of Soviet communism.

Price controls were a big failure. As far as rationing, I can't imagine who will decide which of the millions of Los Angeles commuters deserve to be able to drive to work. I just don't see a system like that being workable in our complex society.

Letting the price float isn't going to be popular either, but at least it avoids creating a black market and it lets people decide how to trade off gasoline against other things they might go without. And I know this doesn't get any points around here, but it also happens to be economically the most efficient way for society to adjust to a shortage.

How will it be better when stations have the gas that everyone wants, but insist on charging more than most can afford?  Will the stations feel less threatened by a potential "mob?"
I am totally against any more gas taxes as I am against any form of regressive taxation.. Price controls and rationing should be discussed. We have way too many drivers that could stop their joy riding and  pitch on for the gipper..
Energy Secy Bodman has announced that later today his approval for A SPR loan will be officially announced. Several requests have been made by specific refineries -- I bet a nickle that he's going to announce that he will approve requests from refineries on a case by case basis as the situation requires, to "ensure the integrity of our energy system" or some such thing.

Stock index futures moved up on the news; crude down (hasn't affected natural gas as much but they dipped too).

I suspect crude will be higher by end of day or by tomorrow once this news is discounted.

Bigger news would be they've got the pipelines for up and running again.

The gas tax ISN'T regressive - poor people DO drive a hell of a lot less than your typical exurbanite, and they get better mileage when they DO drive. Don't buy this hype - it's being fed to you by the people who most stand to benefit - the SUV lovers.

if you're going to blogwhore, at least do it with an account, eh?
I tried, many times, with the account 'm1ek', to use the "Lost password" feature. It generated a temporary password, which I attempted to use to log in, and it never worked.

Don't assume malice. It doesn't help your cause. I had to create this second account just to be able to post this.

There is nothing complex or even remotely difficult about rationing.  We did it during WWII to good effect.  Once a month you get your coupons in the mail.  Of course there will be a black market.  So what?  If you don't want to use your coupons and someone else does you should be able to sell them.  The point is that everyone should be able to have access to a minimum amount of fuel at a reasonable price.  After that, you pay through the nose.  If you just ration by price, the working poor get hit disproportionately hard.
Many gas stations are so understaffed nowadays that they practically compel drivers to pay at the pump with credit cards. On the Indiana Toll Road, most only have one pre-paid cash pump. I don't quite see how they would handle ration coupons. I suppose they could hire more staff, but that would put the price up another 35 or 50 cents a gallon to full-service level. That certainly would not make "the working poor" any happier. It would also take longer to get gas, causing long lines as in the 70s, because there are more cars, and sometimes fewer gas stations, now. And if you're working two or more jobs to make ends meet, you simply don't have time for that.

And what would the newly hired staff be expected to do if somebody filled 'er up, and then said, oh, by the way, I have no coupons? Call the cops, I suppose, and risk being assaulted. Or ask for the coupons in advance and risk being assaulted. Not worth it for a minimum wage job. And meanwhile, until the cops came and cleared up the altercation, a long line of idling cars would build up, burning quite a lot of extra gas like in the 70s.

Of course, you could cut out the laborious and costly business of handling rationing coupons by simply mailing everybody a check, as described in this slightly confusing article (petrol usually refers to gasoline, but seems to refer to heating oil here): ersial+75+euro+'petrol+cheque'+on+the+cards

On the other hand, if you read history or are old enough to remember, then it might smack of presidential candidate George McGovern making himself a laugh-ingstock by proposing to give everybody a thousand dollars. And by basically still allowing the market to clear, it would displease "les dirigistes", the (quasi-)socialists who really want to use the hurricane as an excuse to run everyone's life for them.

We won't need a gas tax to slow consumption, at least for a while, because WHOLSALE gasoline futures are selling for $2.57/gallon on the NYMEX (unleaded regular - add about 0.50 to get to the average retail price).
There will not be retail rationing or price-capping.  Republicans won't do it - they'll let the market allocate fuel.  If there is any type of supply intervention, it will come when the SPR releases are distributed: if there are severe local supply shortages, I'd expect SPR reserves to go to those refineries and markets.

In the areas worst hit by Katrina (N.O., Gulf MS & AL), fuel use will drop anyway: no commuting for employment, washed-out roads and bridges, and little economic activity other than rehab and rebuilding.  In N.O., more than 400,000 potential consumers are simply not in the metro area and will not be allowed back soon, thus keeping them in areas where the existing infrastructure (energy and otherwise) can more readily support them.  

Authorities will also affect consumption through non-price means: curfews to control looting, restrictions on driving to keep roads clear for emergency vehicles, limits on access to areas and roads, delays for road repair, and prohibitions on the return of refugees to their homes.

Any taxation method would be ok (not "regressive") given a long lead-time.  People (including the poor) would have time to adjust.  Unfortunately, we didn't do it.  So now we scramble to think up something that will work without being too painful.  I've got a feeling that is an impossible goal.  There isn't any tax that will work to reduce fuel consumption without also being painful, to someone.

So we are probably left, for better or for worse, with purely a market based solution.  We'll see a shift to more efficient vehicles, and the speed of that shift will be driven by gasoline prices.  If prices go high, expect a rapid shift (as in the 70's).  If prices fall, expect another round of complacency.

All this conversation is good and we should definitely incentivize behaviors appropriately - taxing gas to account for all the externalities that are not captured in our current system - pollution, road repairs, etc. One theory that I would like to advance is that penalizing people is still more of a stick than a carrot.

One carrot that might seem tangental to all this discussion of oil is to simply make dense urban living more affordable, more enjoyable, more family friendly. People in dense cities with good mass transit just flat out don't need cars for much except leisure excursions.

This means taking about improving schools, parks, making housing more affordable, etc. We can't just bash drivers into submission and tell them to stay home in their suburban dream homes. We need to stem to flow of new families from the city into the suburbs, we need to connect more communities to good mass transit, and lower taxes in urban areas as much as possible.

Gas taxes are not going to achieve this culture shift alone. We need to think more systemic. People don't factor gas prices into their decision to live in the suburbs - they move there for better schools, better neighborhoods, lower crime, more affordable living spaces, etc.

If we can invest in improving more dense/urban living areas then we are going to achieve more in the long term than slightly higher gas prices.