Oil prices and the Theory of Punctuated Equilibrium

This morning I read the warning from CBS news that gas prices are likely to climb due to hurricane Sandy. CBS hinges this claim on the refineries of the east coast shutting down and tankers being unable to dock.

Here is a link to the ABC article: http://www.cbsnews.com/8301-505263_162-57540906/hurricane-sandy-could-send-gas-prices-up/

The reason I question this is because of the theory of Punctuated Equilibrium. Punctuated Equilibrium is (cocktail party definition) where something stays constant until a force comes along to drastically change the course of the constant. Think of the enactment of the Patriot Act after 9/11 or gas prices after Hurricane Katrina.

I can see someone arguing that oil prices have been in flux with the combination of current high world demand and the economic downturn the world is experiencing for the last 7 years or so. I argue that oil companies use any opportunity available to raise prices.

It seems funny to me that with the storm incapacitating a large majority of the eastern coast, thus lowering usage, the country’s overall prices might rise due to a lack of production in the east coast area.

A quick explanation of Punctuated Equilibrium: http://en.wikipedia.org/wiki/Punctuated_equilibrium_in_social_theory

While it makes sense that it should be more expensive to get gas in an area where the electricity is out and the pumps are unable to pump, that should have no effect on the rest of us and is only a factor while the electricity is off and the refineries are down. We must keep in mind that they were not without oil products prior to the storm and the oil products that are there are not spoiled. At most, they may see a brief increase while the tankers find their way to the docks or the delivery trucks find their way to the stations.

I offer that gas prices are regional and this should not disturb the rest of the country.


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