Posted on 07/23/2007 6:17:52 AM PDT by Daffynition
The U.S. House of Representatives recently passed legislation instituting penalties of up to $150 million for companies and up to $2 million and 10 years' imprisonment for individuals found guilty of gasoline "price gouging."
But the real gouger driving up gasoline prices is not the private sector – it is our government.
To "gouge" means to extort, to take by force – something that oil companies and gas stations have no power to do. Unlike a government, which can forcibly take away its citizens' money and dictate their behavior, an oil company can only make us an offer to buy its products, which we are free to reject.
Because sellers must gain the voluntary consent of buyers, and because the market allows freedom of competition, oil and gasoline prices are set, not by the whim of companies, but by economic factors such as supply and demand.
If oil companies could set prices at will, surely they would have charged higher prices in the 1990s, when gasoline was under one dollar a gallon.
Because oil companies and gas stations cannot set their prices arbitrarily, they must make their profits by earning them – by efficiently producing something that we value and are eager to buy. In so doing, they assume great risks and expend enormous effort.
Over the decades, oil companies have created a huge infrastructure to produce and distribute gasoline by investing hundreds of billions of dollars in prospecting, drilling, transporting, stocking and refining oil.
In the absence of political factors like the 1973 OPEC oil embargo or the Gulf wars, the net effect of oil companies' pursuit of profit has been to drive the price of oil and gasoline, not up, but down.
The price of a gallon of gasoline (in 2006 dollars) fell from $3 in the early 1920s to $2.50 in the 1940s to $2 in the 1960s to under $1.50 in the 1990s.
This downward trend is all the more impressive because it required the discovery and exploration of previously inaccessible sources of oil and because it persisted despite massive taxation and increased government regulation of the oil industry.
When we see the price of gasoline today, we should not accuse oil companies of gouging but rather thank them that prices are not much higher.
The true culprit that we should condemn for driving up prices is the government, which has engaged – with popular support – in the gouging of both the producers and consumers of gasoline.
Federal and state governments have long viewed gasoline taxes as a cash cow. In 2003, for instance, when the average retail price for a gallon of gasoline was $1.56, federal and state taxes averaged about 40 cents a gallon – which amounts to a far higher tax rate, 34 percent, than we pay for almost any other product.
(Contrary to popular belief, gasoline taxes do not just pay for the roads we drive on; less than 60 percent of the gas tax-funded "Highway Trust Fund" goes toward highways.)
Along with high taxes, environmental regulations – justified in the name of protecting nature from human activity – have dramatically increased the production costs, and thus the price, of oil and gasoline.
The government, for example, has closed huge areas to oil drilling, including the uninhabited wilderness of ANWR and the out-of-sight waters over the Atlantic and Pacific continental shelves. This, of, course significantly reduces the domestic supply of oil.
The government also has passed onerous environmental regulations that make it uneconomical for many old refineries to keep producing (50 out of 194 refineries were shut down from 1990 to 2004) and discourage new refineries from being built (no major refinery has been built in the last 30 years).
Regulations such as these push the surviving refineries to operate at almost full capacity, creating a situation where any significant reduction in the production of some refineries (e.g., from a hurricane) cannot be compensated by increased production in others.
Exorbitant spikes in prices, which many attribute to oil companies' "gouging," are actually caused by government constraints.
If we want to stop the irrational forces that have been driving up the price of gasoline and our cost of living, we must demand that our elected officials eliminate the regulations and excessive taxes that restrict the producers of oil and gas.
It's past time to stop gouging oil companies – and ourselves.
I meant to ping you to my #100 if you’re interested. Blackbird.
parroted perbatum,
Is English your second language? Clearly, you have displayed a total ignorance of not only market economics, but the language our country operates on. I'm laughing away at you now.
Maybe, if you had a clue, you'd realize these places generally buy the fuel from the same wholesaler, who sets his price daily, and they generally work on approximately the same very low margin. It's not collusion, it's market economics, but you don't understand a basic principle that kids who run a friggin lemonade stand can figure out. You need to charge more than it cost you, and you aren't going to sell your commodity if you are the highest priced game in town.
Tell me, what do you do for work? Do you know what your employer makes for a margin? I know my company would fire me if the projects I ran brought in the measly margin the big oil companies make.
You manage to parrot the liberal talking points, yet call me a moonbat? Yeah, you are delusional. I have some other, more apt descriptions, but they don't fall within FR posting guidelines.
We are being TOLD that shortages are the result of 'down times'! What refineries are affected? What was wrong that resulted in less than full capacity? I just have a problem buying all of the BS that speculators are spewing.......
What is wrong with $3 a gallon gas? It's one of the few things that have risen less than the rate of inflation. OK, so it isn't fun paying that much, but hell, why not bitch about the copper market. I pay twice what i paid 3 years ago for a roll of romex. DAMNIT, that's gouging. OK, just joking, it's market economics, but you'd never get that.
Ok, so we've gone from milk/water to jewelry and are moving on to copper. I'm telling you moonbat, you need to perfect the engines that run on that stuff and you'd be a zillionaire.
Thank you fr displaying your fross ignorance of market economies
And you think you have any business criticizing ANYONES literacy moonbat? Blackbird.
Tell you what, I'll pay $1.50 at the pump, you can pay $4.50 and make up the difference. Money is no object to you, considering that you suck on the dividend check, deal? Blackbird.
Yeah, I had a typo, but clearly you don’t even know what you are trying to say. Don’t ping me, you just don’t understand, and you clearly aren’t worth the effort to explain it to. My kids are way smarter than you, they understand market economics.
Gluten is an amorphous mixture of ergastic (i.e. non-living) proteins found combined with starch in the endosperm of some cereals, notably wheat, rye, and barley. It constitutes about 80% of the proteins contained in wheat, and is composed of the proteins gliadin and glutenin. Gluten is responsible for the elasticity of kneaded dough, which allows it to be leavened, as well as the “chewiness” of baked products like bagels. It is the glutenins (specifically, low molecular weight glutenins) that are especially critical to gluten quality.[1], [2]
The last refuge of all moonbat cowards. Blackbird.
LOL. Yeah, that’s it, you are jealous I am making a TON off of you. I plan to retire in about 5 years if my portfolio keeps going the way it has. I think 45 is a good age for me to retire. When do you plan to, when your social security checks come due, at 67? LMAO! See ya!
Exxon-Mobil doesn’t seem too badly gouged. They recently reported one of the biggest quarterly profits in their company’s history. I don’t weep much for them...
Greed is not a Conservative trait noob! Blackbird.
Because I have little patience for utter stupidity, and that’s you. Take your argments over to the liberal boards where they will be well recieved. Conservative capitalists like me don’t buy your stupidity.
NEVER been there noob, but it seems to be an obsession with you. What's your screen name @ DU? Blackbird.
Explain the greed in making an 8% margin, or wisely investing? Government control is a socialist desire, though, so why keep pushing for it, commie? I'm sorry you can grasp simple capitalist concepts, and keep tugging on the socialist line. You aren't making yourself look to bright at all, Karl. Hurry along, I'm sure you can go watch your heroes from their debate last night over at youtube.
When did it drop 2%? Overnight? You can't even keep your lies straight. Blackbird.
LOL, no, you are the one parroting liberal lines. The way you wrote that, it looks like you are asking me if my name at DU is blackbird. I assumed that's yours.
The worlds biggest companies make the worlds biggest profits. Weird, huh? They sure didn't make it on margin, though.
Perhaps there are some people who can get by in this country while rejecting the costs of gasoline, but not many. When the oil companies control supply and demand and have limited the number of oil companies in existence (to reduce or eliminate competition), then they do have some control over the pricing of their product. That does not mean that the Government is not complicit in this process.
You do know that a question mark (?) ends the sentence or did that go over your head too? < see question mark. I can do this for days noob, you're still working on amateur hour. Blackbird.
If you really dislike oil companies that much, do your best to conserve, buy a hybrid, bicycle,or moped...etc.
As an individual you do your best to invest which brings you the best money, why can't the oil companies? As another poster said, you have been duped by MSM.
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