Breaking News

My sister's friend just told me that the highways are currently backed up with people rushing to gas stations in my area of Atlanta. She reported seeing long lines at gas stations, lines backed up to the highway, and fistfights breaking out among those waiting. Supposedly, there are rumors of an impending gas shortage and people are trying to fill up before it's all gone. After hearing this, I searched online to see if any of the news outlets have picked up on this story, and came across this MSNBC report:

Gas prices in cities across the United States soared by as much as 40 cents a gallon from Tuesday to Wednesday, a surge blamed on disruptions by Hurricane Katrina in Gulf of Mexico oil production.

In many metropolitan areas, such as South Florida and Atlanta, prices were already approaching $3 a gallon, as they shot up throughout the early part of this week. Some stations in Chicago, areas of Boston and Atlanta reported prices exceeded $3 a gallon. In the Atlanta area, a Chevron station in Stockbridge, Ga.'s price surged to $3.78 a gallon Wednesday afternoon and the Atlanta Business Chronicle reported many were charging $2.99 a gallon.

It's interesting to note that Georgia normally has some of the cheapest gas in the country because of our low gas taxes. The gas station closest to my house is also often one of the cheapest in the state, and thus the cheapest in the country, which may explain why everyone is flocking here.

Also, following a few links from that MSNBC article, I found this question-and-answer column by John Schoen, Senior Producer at MSNBC. Here's a tasty excerpt:

Call it the Hurricane Effect. What happens when there’s a big storm coming and everyone rushes to the hardware store for batteries? Demand is sure to overrun supply. Since the hardware store can’t raise prices to slow hoarding (they’d quickly be hauled off to jail for “price gouging”), the store runs out of batteries. So retired senior citizens and others who have all day to shop for batteries get there first and clean out the shelves for $1 a pack. When you get off work, you’re out of luck.

If battery prices were allowed to rise to, say, $5 a pack when supplies got tight, the early bird shoppers might think twice before buying 10 packs. They might realize they can get by on 2 packs, leaving adequate supplies for the rest of us.

In other words, there are only two forms of rationing: letting prices rise or restricting physical delivery. We now have price rationing. If you cap prices, all you’ll do is make it more likely you’ll have outright shortages.

And here's another:

If OPEC wants the price of oil to be around $40.00 per barrel why don't they just sell it for that price. At 60 or 70 dollars a barrel they must be getting very very rich... How can they spend all the money they are making off their oil? Is the oil really theirs or should it belong the to all the people of the world?
Kit Birmingham, Big Pine, Calif.

The Supreme Court's recently decision notwithstanding, our country has a long history of respecting property rights. If the oil in Saudi Arabia belongs to the people of the world, that sort of gives me the right to move into your basement without paying rent.

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Now I'm curious- I just got

Now I'm curious- I just got an email over my official university mailing list saying that use of all state vehicles is being suspended. The university motor fleet is basically shut down, as the email said, "until the fuel situation stabilizes." They're sure acting like there's a major gas shortage. Is there really?

Anyone know the history

Anyone know the history behind the Saudi oil fields?

Oddly enough, I don't. I should, because I grew up in the Aramco compound in Dhahran, Saudi Arabia... but when you're young, you don't really pay that much attention to international economics and the nationalization of industries.

I *can* tell you that the Saudi government acquired a larger and larger ownership percentage of Aramco as time went by. It was a minority position in the fifties and was fully nationalised by the mid-eighties (I think). I don't know what compensation the founding oil companies received.

I do know that the transition was gradual; the story of the first fifty years of oil in Saudi Arabia was one of American and other western companies supplying the skilled labor and management while the unskilled labor was provided by Saudis, Yemeni, and Pakistanis. Over the course of two generations, the Saudis became wealthy and educated and began taking over the skilled and management positions; the company became less and less western and more and more Saudi. This probably corresponds well with the increasing Saudi ownership of the company.

FYI: Aramco is the Saudi oil company; the *only* Saudi oil company. It was originally a consortium of western oil companies, but for a very very long time it has been the sole explorer, producer, and exporter of every bit of oil in Saudi Arabia.

My parents have tons of information on this stuff if you're really interested. Dad worked for Aramco for twenty-five years.

Stormy- I'm not sure about

Stormy-

I'm not sure about how it all went down, but usually the US frowned very heavily on nationalizations of US owned industry, though it is entirely possible that the Saudi's compensated the owners either at par or something close to it. That was, in fact, one of the reasons the US was so pissed at Allende; he came up with bullshit accounting that said "we don't have to pay you anything because of some 'overcharges' we invented after the fact, so it all washes out on net". That triggered automatic sanctions and certainly didn't help anything.

[bleg] Anyone know the history behind the Saudi oil fields? [/bleg]

Gas hit $3 a gallon here

Gas hit $3 a gallon here yesterday. I think I'll go fill up my car.

"The Supreme Court's

"The Supreme Court's recently decision..."

Awesome.

Heh, I didn't even catch

Heh, I didn't even catch that.

Of course, most of the oil

Of course, most of the oil fields were bought by US and British oil companies, developed by the same, and then forcibly nationalized by the countries they were in.

So leaving them under Saudi control isn't exactly respecting property rights.