California is currently facing gasoline shortages, which are causing prices to spike and gas stations to shut down. While the shortages are partially the result of a temporary refinery shut down, it is also apparent that these shortages are also the result of a wall of scarcity.
According to Yahoo News:
Gasoline inventories in California, however, are still at their lowest point in more than 10 years, a situation made worse by the mandate for the special summer gasoline blend. Few refineries outside the state can make it, meaning there are few outside sources to draw from for help, Cinquegrana said.
A wall of scarcity is when a regulation or mandate creates an artificial scarcity for a product that leads to market inefficiency, and this is a classic example. It is pretty likely that many motorists in California would love to be able to purchase gasoline from other western states. It is also pretty likely that this isn’t going to happen.
Californians should also expect this wall of scarcity to produce negative economic effects that will reverberate far beyond the price of gasoline.