IT PAYS TO UNDERSTAND ECONOMICS. In August, Hawaii's Public Utilities Commission issued wholesale price caps for gasoline, a development that led Coyote Blog to deem Hawaii a "peoples' republic." In the comments to that post, I noted,

The state's behavior makes misguided use of a basic principle of competitive supply, namely cheaper inputs translate into cheaper final product. But the way this regulation works, with the retail price of gasoline not capped and the wholesale supply limited to that which can be profitably sold at the controlled price, there will be no gas lines as a somewhat higher retail price will clear the retail market. I use a variant of this in price theory courses (at all levels) all the time.

Later that day, the Coyote updated his post with a link to Jane at Asymmetrical Information, who made a similar observation.

Monday morning, the wake-up-radio-news included the latest retail gasoline price survey from Lundberg. Money observation.

Mainland prices are falling faster than Hawaii prices.

As Gomer Pyle would put it, Supraahz, supraahz, supraahz.