The headline reads: East Coast Faces Gas Shortages, Price Hikes After Pipeline Leak. In academic terms, a shortage occurs when the quantity demanded exceeds the quantity supplied of a good at the current price. That would seem to be the case here. The pipeline leak has led to a decrease in the supply of gas to the east coast. If prices are held constant, then a shortage will occur because the quantity demanded at the current price has not changed, but the quantity supplied at the current price (and at all other prices) has decreased. So if the market were in equilibrium before the supply decrease, and the price remains unchanged, then the quantity supplied is now less than the quantity demanded at the current price. The shortage will persist if the price is unable to adjust to alleviate the shortage. BUT, as the headline alludes, the price CAN adjust and any shortage will be temporary. A shortage places upward pressure on prices. As the price rises, the quantity demand decreased (the law of demand) and the quantity supplied increases (the law of supply). The price will keep rising until the amount of gas people want (quantity demanded) equals the amount of gas sellers are willing to sell (quantity supplied). The figure below illustrates the situation:
The left-hand panel illustrates the situation before the leak. As a result of the leak, the supply decreases (right-hand panel) and the price rises and quantity of gas sold decreases. If the price were to stay at the 'before' level, there would be a persistent shortage.
