Politicians Open The Oil Supply Floodgates Post-Sandy; Lessons Learned Or Lost? (#economics)

In “Flared Tempers Over Gasoline Lines Prompt Supply Waivers” at Bloomberg.com, we learn that politicians at the state and federal levels of government are temporarily suspending existing rules, regulations and taxes to increase the supply of gasoline  available in storm-stricken areas while simultaneously lowering the price:

The Obama administration said today that it waived the Jones Act, which requires ships moving goods between U.S. ports to use U.S.-flag vessels. The action, which applies only to refined products, will increase the number of tankers available to transport fuel from Gulf Coast refineries to the East Coast.

In New Jersey, Governor Chris Christie suspended requirements that restrict filling stations from buying gasoline from out-of-state suppliers, while New York Governor Andrew Cuomo waived taxes and regulations to accommodate more fuel tankers and process them more quickly.

To the average observer, it may seem that these powerful political leaders are able to work economic miracles. Merely by suspending laws, a vast new supply of much-needed gasoline appears out of thin-air to come gushing forth to the masses, alleviating them of their post-hurricane energy stress.

But did these poles really create these refined oil products themselves? Did they create them and summon them into existence through sheer force-of-will and a few expert penstrokes?

No, of course not! This supply of energy existed the whole time, but it wasn’t able to service the people of the affected East Coast regions because rules, regulations and taxes, imposed and enforced by these very politicians, had forcibly prevented and impeded its efficient and cost-effective arrival!

This is an excellent example of Bastiat’s emphasis on the unseen. When the storm arrived and devastated the normal supply-demand equation, it became transparently obvious to everyone that these interventions impose real, dangerous costs to everyone in society and it became politically necessary to suspend them for the benefit of all. But the costs of these programs and policies do not come and go with the storms– they are with us all of the time, imposing unseen costs because the “margin” of economic activity that is thus proscribed is further and further away from the central attention of the average person.

Because these policies impose costs and undue social burdens all of the time, not just in the aftermath of natural disasters, it follows that if and when — though “temporary” increases in government power almost always prove to be anything but, temporary decreases in government power rarely become permanent — these rules and regulations are reimposed, their costs will return as well. And this means everyone will be the poorer for it.

Who will remember this hands-on lesson with the real economic and social costs of government regulations which senselessly restrain trade and commerce? Who will cry out in anger that the politicians deem it necessary to hurt them once again, having tasted this bit of freedom? How many will stand up and ask, “Why? Why are you doing this to us?”

My guess is almost no one, and the few voices which may sound will quickly be muffled, condemned and ultimately ignored.