Problem
I observed an interesting incident when I was working on a blog about using game theory for decision-making. Because of the ongoing Iran war and the blockade of the Strait of Hormuz, the supply of crude oil, petrol, and LPG was strained.
Midst all this, on Monday, 23rd March 2026, people started flocking to petrol pumps in various parts of Gujarat, India, by the news of its depleting stock. Pumps were crowded with queues stretching long outside. As news spread like wildfire, more people brought their two and four-wheeler to keep their tanks full.
Reel or Reality?
While this was happening, authorities were trying to assure people that they had sufficient petrol stock and that there was no reason for panic. But at that point, people were already in their FOMO phase. Everyone was, nope, has to run to the petrol pump to make sure that they weren’t left out.
It didn’t matter if the news of depleting petrol stocks came from any credible source or was just a WhatsApp forward; people have already seen the reel of crowded petrol pumps. So, they too had to run, otherwise they wouldn’t have petrol to drive to their office tomorrow.
Therefore, in a way, it became a scarcity paradox. There was not an actual scarcity, but people ended up creating an artificial scarcity because they believed the rumors. Because by Monday evening, many petrol pumps were emptied because of a sudden spike in demand. They had to remain closed until the next day when the regular or their daily stock arrived.
The How and Why?
People are smart; they wouldn’t fall for a rumor this easily. But there is a reason why people are susceptible to their fears or driven by emotions in such situations instead of taking a rational path.
The reason is repeated shocks of uncertainty. The world has been restless since the COVID-19 pandemic. It has also witnessed multiple wars in a short timeframe and has to bear the economic, social, and mental impact of them all, one after another.
However, in this case, most of the Indians’ lives were not directly affected by the war in West Asia. The global economy and national stock markets were affected largely, yes, with millions wiped off, but the common people in India remained unaffected.
The first reason to worry for most Indians arose when Iran blocked the Strait of Hormuz. That’s when the shortage of LPG or cooked gas came to be. Many restaurants and hotels either closed off temporarily or started offering alternative meals that save their resources. Having experienced this little discomfort made people wary of upcoming hardships.
And when the iron was hot, the rumor was hammered about the possible scarcity of petrol. Most people keep themselves up to date with the daily news. They knew Iran was not backing off and was giving a stronger response to the US-Israel. They knew that Iran was not letting US and allied ships pass through the Strait, they also knew that a few Indian ships were safely given passage.
But the possibility of a prolonged conflict and the unyielding attitudes from both sides created a fog of war, and each rushed to their own security, in this case, to get the petrol before it depletes. Who knows when we will get another chance to refill?
The first wave rushed to petrol pumps because of the combination of rumors and the uncertainty behind the problem. Now, this little panic was captured and shared widely across social media, which brought another wave of people with FOMO on petrol. As the lines increased at the petrol pumps all around, people had to wait for about an hour to refill their vehicle tank, a task that would have taken no more than 5-10 minutes under normal circumstances.
The rumor of scarcity increased the demand for the product, and as more and more people rushed to buy the supply, the stock at the stores (in this case, pumps) depleted quickly, creating a temporary and artificial scarcity, but a real problem.
A Textbook Tactic
Time and time again, many businesses, especially established brands, use the scarcity rule to make more sales or increase the average order value. Limited stock, limited time offer, limited editions, holiday special offers and sales are a few examples of it. This is what happened with petrol as well. The only difference was that nobody tried to profit from this artificial scarcity. Some tried to book a profit by black-marketing in the LPG crisis, but no such practices were observed during the petrol crisis, maybe because it was not an actual problem.
Result
No economy shatters with a single big hit. It breaks because of multiple small shocks it failed to withstand. Due to that, it becomes unstable over time and falls off with a single little push.
Similarly, there is no grand strategy or a single solution that fixes everything. You need multiple shock absorbers placed strategically.
When the new stocks arrived the next day, the closed petrol pumps started again, and lines at petrol pumps reverted to normal and at the time of writing, the news arrived that Iran has opened the Strait of Hormuz for friendly nations, which includes India. So, for now, the situation has been resolved. But during his recent parliamentary address, the Prime Minister of India, Narendra Modi, said that like COVID, the war in West Asia will have a long-term impact.
This statement is subject to many interpretations, and that is where the beauty of game theory really shines.
Thanks for reading!
Stay tuned for the next blog on how to use Game Theory for Decision Making.
Kushalam 