Why panic buying makes things worse for regional communities

WHEN Evans Petroleum put diesel purchase limits on its bowsers at the BP on McKenzie Street in Wonthaggi and suspended overnight sales to monitor supply, it was a visible sign of how quickly fuel anxiety can spiral in regional towns.

The measures came as demand surged across Bass Coast and South Gippsland with diesel crashing through $3 a litre and drivers rushing to fill up before prices climbed further.

Evans Petroleum sales manager John Schelling said demand had since eased with the company receiving 100 per cent of its allocation from suppliers allowing it to catch up after a hectic few weeks.

“Fuel supplies are good locally and demand is easing,” Mr Schelling said.

But UNSW Business School experts say the surge in demand that led to those restrictions is driven as much by instinct and expectations as by actual shortages with regional communities particularly vulnerable given their distance from major distribution centres.

UNSW School of Marketing Professor Nitika Garg said fear and uncertainty bring out risk-avoidant behaviour.

“That often leads people to stock up or act early because they are trying to protect themselves from what might happen next,” Professor Garg said.

UNSW School of Economics Senior Lecturer Dr Timothy Neal has studied panic buying at scale including research published in the Journal of Econometrics that showed Australia stood out for the speed and intensity of its response during the COVID-19 pandemic.

“We’re a highly globalised country and people understand that what happens elsewhere in the world can affect us here,” Dr Neal said.

“We rely on diesel and petrol that comes from Asia and Asia relies on crude oil shipments from the Middle East.

“So there’s a clear link between what’s happening in the Persian Gulf and what we expect to happen at petrol stations in Australia.”

Professor Garg said once consumers see others stocking up the behaviour escalates quickly.

“The more essential a commodity is perceived to be from the consumer perspective the more fearful they will be,” she said.

Dr Neal said there are two motivations behind panic buying.

“If you think you might not be able to buy the goods you need next week you’ll buy more this week,” he said.

“But the second motivation is about price. If you expect the price to go up you’re incentivised to stock up now.”

Both experts said clear and early communication from government is critical to reducing fear noting that panic buying can deepen the very disruptions people are trying to avoid.

For towns like Wonthaggi, Inverloch and Leongatha where the nearest major distribution hub is more than an hour away that message carries particular weight.