When panic-buying makes sense

A petrol station closed by panic buying (picture Mike1024)

The queues outside petrol stations last week tell us something important about the way politics is conducted in this country (or, for that matter, anywhere else).  The lesson is that panic-buying sometimes make sense, which means that the purpose of politics is to prevent the panics.

The origin of the scare was the possibility of a strike by tanker drivers.  There are 2,000 of them, members of the Unite union, threatening to strike at Easter in a pay dispute.  The result would have been a shortage of fuel at the UK’s petrol stations, which in turn would have brought almost everything to a halt.  A similar interruption to supplies in September 2000, caused by protestors against the price rather than by a strike, came close to bringing the country to a halt.

Jonathan Powell, the prime minister’s chief of staff at the time, has written:

“The public never realised quite how close we had come to shutting the country down on 13 and 14 September 2000. Ford had been about to close its European operations; hospitals were about to shut down for lack of fuel; and cashpoints were about to run out of money. We were considering taking 1920 emergency powers to run the country. The blockade broke down just in time.”

Faced with this prospect, how to prevent such chaos?  One idea was to get people to stock up in advance, another was to reassure people that there was no risk of a shortage.  The former would have seen many people through the strike, were there to be one: supplies could have been preserved for those people for whom the need was greatest.  The latter would have freed up more supplies in any case, rather than ending up with large amounts of fuel uselessly sitting in the tanks of cars that were only ever used a little: the average car needs to fill up little more than once a month.

The government last week followed the first strategy, leading to panic-buying, before switching to reassurance and hoping to end the confusion.  Politically, not so good.  But the interest of this website is in the panic.

For, faced with a queue for petrol, what is the rational thing to do?  Most people buy petrol when they need it, expecting that petrol stations will be in stock.  However, the prospect of running out of petrol is worth avoiding: for that reason, if stocks are likely to be scarce, for whatever reason, it becomes rational to buy it in advance rather than to risk not being able to get any.  What that means is that the panic, in itself, becomes justification for panicking.  Behaviour that on the part of the group is irrational becomes rational when looked at from the perspective of the individual.

It is no good appealing to people not to panic.  The task for politicians is to prevent that panic from starting.  Those who have responsibility for the collective interest have to engineer the conditions whereby the pursuit of the individual interest, if contrary to the collective interest, does not break out.  Last week, the British government got it wrong.

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