Prices are of great interest to economists. The high price of gas is the topic of many conversations, but the price itself sends signals to both buyers and sellers. The gas shortages which caused rationing during the oil shock of early 1970s was caused by the politically popular price controls instituted by Richard Nixon. The artificially low price sent incorrect signals to buyers and sellers in the market, resulting in shortages and the resulting rationing. If the price controls had not been used, people would have felt more pain at the pump, but not the inconvenience of gas lines and the wasted fuel sitting in line waiting for gasoline could have been avoided.
The current situation is a prime example. Because the price has been allowed to rise to the equilibrium level, there are no shortages. The high price causes consumers to reduce consumption. The high price also induces suppliers to increase the quantity produced. Examples? Oil drilling in North Dakota (click the skip the welcome screen link) has become feasible at the higher price and the politics of drilling are changing. As a result of the reduced consumption and the increased production... no shortage. Another reason to love free markets.
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