Posted on 05/19/2007 5:15:18 AM PDT by Kaslin
Well, thank heaven lawmakers are finally talking about doing something about soaring gas prices.
Here’s the very latest warning from Capitol Hill: “If a few great oil companies are permitted to manipulate prices for the next few years as they have been doing since 1920,” a Senate committee wrote, “the people of this country must be prepared before long to pay at least a dollar a gallon for gasoline.” Oops, sorry -- my mistake. That’s not a new report, it’s one written by Sen. Robert La Follette in 1923.
Oh, here’s a more recent example: “The American people want to know why oil companies are making soaring profits,” Sen. Henry (Scoop) Jackson said. “The American people want to know if this so-called energy crisis is only a pretext, a cover to eliminate the major source of price competition.” Oops again. That’s from 1974, not today.
Ah, here it is. The House of Representatives is considering the Federal Price Gouging Prevention Act (H.R. 1252), a measure that would supposedly “protect consumers from price-gouging of gasoline and other fuels.”
The law claims it would do this by making it “unlawful for any person to sell crude oil, gasoline, natural gas, or petroleum distillates at a price that—(A) is unconscionably excessive; or (B) indicates the seller is taking unfair advantage unusual market conditions (whether real or perceived) or the circumstances of an emergency to increase prices unreasonably.”
Maybe lawmakers ought to apply the same restrictions to other products. Some of us might find it “unconscionably excessive” that Starbucks charges the same amount for a 20-ounce cup of coffee that a consumer would pay at a supermarket for an entire can of coffee, one that will make dozens of cups. We might also find it “unconscionably excessive” that the same supermarket charges $1.25 for a bottle of the same water we can get direct from a tap for pennies. Talk about a markup.
There’s a lesson here, if lawmakers will learn it. The federal government has failed -- badly -- to regulate gasoline prices before, and if it tries again it will fail again. That’s because it’s virtually impossible to beat a market economy.
In a free market, consumers get to decide what they’ll pay for a product. If the price is too high, they won’t buy it. Few people owned plasma televisions when they cost $6,000, but as the price has plunged, such TVs have become more common.
The same thing is true for gasoline. If the price gets too high, consumers will buy less and thus drive less. As USA Today reported on May 18, this already seems to be happening. “Miles driven in February declined 1.9 percent from February 2006,” the paper reported, “That’s in sharp contrast to the average annual growth rate of 2.7 percent recorded from 1980 through 2005.” The market works.
Of course, lawmakers aren’t powerless here. There are steps they could take to help consumers. They should start by becoming less involved in the oil industry.
Think back to the La Follette era of the 1920s. Then, gasoline was a true commodity. It was the same whether one bought it in Maine or California. But today, various states and local governments require oil companies to deliver specific blends tailored to their desires. That makes it more difficult for refiners and thus more expensive.
A leading example of this is ethanol. The federal government requires ethanol be added to our fuel supply. This increases the price of both corn and gasoline. If lawmakers would end the era of “boutique fuels,” gas prices and food prices would come down.
What Washington shouldn’t do is attempt to set prices. During his hearings back in 1974, Sen. Jackson complained that he could never find an open gas station. Dealers kept running out of gas and shutting down. Well, that’s completely predictable. Back then, the oil industry was operating under federally-imposed price controls. That meant Washington was artificially limiting the free market’s ability to make gasoline available.
Note that after Hurricane Katrina and now today, with gasoline costing more than $3 per gallon, there are no long lines for fuel and no stations closed for long periods of the day. The price went up, but the system didn’t collapse. Again, the market works.
For decades, politicians have attempted to determine the “fair” price of gasoline. Meanwhile, they’ve been meddling in ways that artificially drive up the very prices they say they’re trying to control.
If lawmakers actually want to help consumers, they should stop legislating and allow a free market in gasoline.
Rich Tucker is an editor in Washington D.C. and a columnist for Townhall.com.
1- Get a very fuel-efficient car, truck or motorcycle. You can do without the V8 land yacht.
2- Drive and plan your day efficiently. Do what you want, but save gas where and when you can.
3- As our oil consumption drops, the sheiks will be very, very nervous. China and other markets will still be hungry for oil, but the USA is the prize, and if we can shake off the chains of OPEC oil to some degree, their influence over us will diminish. Good for us; bad for Wahabbi lobby.
Idiots with access to keyboards.
Can you spell long lines?
Nope. Won't happen. They can't help themselves (or us for that matter.)
I’m so glad we fought the Iraq war for oil like the liberals claim.
If Congress really wanted to bring down to cost of gasoline, they would subsidize refinery construction, particularly by independent operators.
The market in Gasoline in this country is not free, because there are too few players. This allows them to act as a group to set prices. The game theory is greatly simplified if there are only ten or so players.
We need thirty different players in the refining business and 10% over capacity, and then you will start to see competition. But, instead, government has done everything it can to eliminate refiners and refineries, and makes it impossible to site new ones. Chronic shortages and coordinated behavior by the few remaining refiners is the inevitable result.
In a free market, consumers get to decide what they’ll pay for a product. If the price is too high, they won’t buy it.
Yeah, I’m going to start walking the twenty miles to town when I need groceries. On second thought, I’ll quit eating since food prices are rising too. A person has to bee a fool to believe that free market and energy can be used in the same sentence. No, we don’t need the government screwing things up with price controls. The government could however build a few refineries and lease them to private companies to eliminate the bottleneck.
Can anyone site instances where state or fed. govt. has stopped the building of a refinery. I keep hearing they have , I would like to see sources.
Except for gasoline. When was the last time an oil company had a "sale" or a gas "price war"?
Hell, it's actually against the law in some states for a gas station owner to price his gas lower than his competitors.
If the gubmint wants to help the people then it needs to drop the taxes on gasoline and the laws requiring different blends for different states.
Every May the price of gasoline soars. Would people just stop acting so surprised?!?
For the past tank of gasoline I have reduced the speed of my commute on the Garden State Parkway from the customary 75-80 mph to the legal 55 mph. I reached the milage where I normally require a fill, and I still have a quarter tank left.
So, my milage is up 25%, and it has cost me about 60 minutes in increased commuting time over the week. That works out to paying myself about 8 bucks an hour in extra time commuting. Not my normal pay rate, but not nuthin', either...
Plus you add in the savings in wear and tear on the vehicle, aggravation about somebody getting in my way, and subtract out the fact that I am more relaxed and productive behind the wheel when I am not doing my Mario Andretti imitation, and this begins to make a lot of sense.
And I don't want to hear a lot of whining about how I am getting in the way. I'm following the limit in the right-hand-lane of a six lane (each way) highway. There are plenty of lanes left for people who want to drive 80 mph.
Go down to your local Department of Environmental Protection and tell them you want to build a refinery in such-and-such a town, and see how far you get. It is simply not possible. You don't hear about people failing, because nobody even tries.
You don't see many people failing to do a running jump over the Grand Canyon, either.
The oil industry is not a free market. Perhaps this author has heard of OPEC. But...perhaps not. It is an "Oil Cartel."
I don't for one minute believe that this industry is a free market.
Let see, I am suppose to be upset that “Big Oil” is “gouging” me $.10 a gallon but I am just suppose to tug the forelock and say Thank You to the Govt that takes $.50 from me for the SAME gallon of gas?
It’s the cheap gas that allows all of us to live so far from conveniences. If the gas became too expensive for you and your neighbors to travel 20 miles for food, I think that a “mom and pop” general store would eventually open in the neighborhood and you wouldn’t have to drive so much to get your supplies.
-Just a theory, not trying to judge your reality.
Well, our state’s gas tax (NC) is tied to the price of gas. A few months after the price goes up our state tax is adjusted at the pump.
The law makers wring their hands and say there is nothing they can do, it’s the law after all.
HEY LAWMAKERS, CHANGE THE LAW!
The reason is the the Govt has so bureaucratized the permit and license process that no one but a very well funded organized interest can enter the market place.
Regulation on how gas is made, what price it can be sold at and when and where it can be refined basically created a very high barrier to entry into the market.
The result is “Big Oil” has a near monopoly BECAUSE of the barriers imposed on the Market by Government bureaucrats. An Entrepreneur cannot afford the costs it would take to work his way thru all the legal/regulatory challenges and build a private refinery
“Big Oil” exists because the State and Fed Govt have created a regulatory system when they essentially have a legalized Monopoly.
If you used 4 gallons and you now use 3, your milage is up 33%.
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