Posted on 09/08/2005 11:08:53 AM PDT by aynrandy
Gouging - even the word sounds frightening.
These days, there's been a near-unanimous call for the public to be outraged over price-gouging at gas pumps around Denver.
Well, I'm not outraged, and you shouldn't be either.
Here in Colorado, as elsewhere in the nation, high gas prices have generated hysterical, populist rhetoric from those who've forgotten the fundamental principles of supply and demand.
"Gas-price gouging is not illegal under Colorado law, and we think it should be," Colorado Speaker of the House Andrew Romanoff recently claimed.
I'm not sure what Romanoff meant by "we" - I would like to be excluded - but anyone who believes gouging is a concern will really have something to complain about if shortsighted price controls are implemented.
This week, Romanoff promised to pressure the state attorney general and the Public Utilities Commission to "investigate" the problem and "combat" gouging.
It's going to be difficult to "combat" the irrefutable fact that fuel supply is down and demand is up. And really there is nothing to investigate, unless you believe in conspiracy theories.
Hurricane Katrina destroyed 12 percent of the nation's refining capacity. This fact, coupled with rising demand from nations such as India and China, has put a tremendous demand on oil - a fungible global commodity.
Price controls bring lower fuel prices and increase demand. But when demand is outstripping supply, we can all look forward to shortages and lines.
Fact is, gouging is a myth. It's called making a profit.
"For many Americans outside of the Gulf Coast, the immediate impact of Hurricane Katrina isn't looting in the streets, it's looting at the pumps," says "Looting at the Pumps," a release by CoPIRG, a public-interest advocacy group.
I spoke to Rex Wilmouth, state director of CoPIRG.
So, was there gouging in Denver?
"We were seeing the prices go up in four or five days from 60 to 70 cents," Wilmouth explains. "Our take on it is this: We looked at how much money the oil industry was making and how much they were posting as profit; we were astounded that they felt the need to increase the price of gasoline in the time of a natural disaster."
Wilmouth, no doubt, is well-intentioned. He will apparently do anything to save us from the evils of Big
Oil - except actually learn about the oil business. "Last week, the stock prices of major U.S. oil producers ExxonMobil, ChevronTexaco and Conoco-Phillips have surged," he tells me as part of a long harangue about the success of Big Oil.
It took me a few minutes to comprehend that this was supposed to be bad news. Millions of Americans own oil stock - shouldn't we be happy for them?
I mean, higher gas prices mean increased stinginess on the part of the consumers at a time of low supply, right?
Isn't that positive?
Don't Americans have alternatives? A consumer can decide to travel less, take public transportation, or buy a fuel-efficient car or drive to a cheaper station.
Hybrids, Wilmouth understands. As you can imagine, he is very excited about hybrids.
Now, Romanoff and Wilmouth are entitled to espouse that government should have the authority to dictate the price of products in the free market.
But then, why stop at oil?
Today, for instance, a quick calculation revealed I had shelled out around 8 bucks a gallon for my bottled spring water.
But that's nothing. Last time I went to see a movie, I paid approximately $200,000 a gallon for soda - I'd need an infinity sign to calculate the per-pound price of popcorn.
Or how about this?
Why don't Colorado and the federal government cut or suspend the 40-50 cents we pay in taxes on each gallon, depending on where you live?
Funny, with all the concern for consumers, no one's proposed something that would actually help them.
David Harsanyi's column appears Monday and Thursday. Reach him at 303-820-1255 or dharsanyi@denverpost.com.
at this point, whatever we feeble consumers think is fair or unfair is a moot point....we are technically in a vise and they are operating it...
solution is to break their grip....break their monopoly....break their hold on all of us....
Hello! Paging Bill O'Reilly! Please read and learn!
Price Gouging at the Multiplex!
OBJECTION: "But we don't NEED to buy popcorn and soda..."
RESPONSE: "We don't NEED to buy bottled water, but we do. We don't NEED an over-sized restaurant serving, but we order it anyway. We don't NEED to rent that stupid movie, but we do it anyway. We don't NEED many things but we buy them anyway because WE HAVE IT GOOD IN THE OL' U.S. of A!
People can rationalize what is happening all they want ---
There is a huge difference between MAKING A PROFIT and CRASS PROFITEERING.
Once it leaves the ground, it is the free-est and most competitive market their is.
"solution is to break their grip....break their monopoly....break their hold on all of us...."
I was going to start a gas company, but they wouldn't let me build a refinery.
So why is gas down 10 cents in the last 2 days? Are the stupid oil companies just deciding to charge less?
Why was gas only a buck 10 years ago? Were the oil companies just stupid allowing the price to get that low?
Or, are you wrong, and in fact the price is determined by market forces?
Harsanyi's columns are the only reason for ever picking up the Denver comPost.
Governments pass legislation to cap price per gallon of gasoline at pump.
Next Day, everyone's 401k take an unexpected hit.
DIMS: "We need an investigation! BUSH'S FAULT!"
But that's nothing. Last time I went to see a movie, I paid approximately $200,000 a gallon for soda - I'd need an infinity sign to calculate the per-pound price of popcorn.
I don't know about $200,000, but I paid $66 a gallon for a beer at the last football game I went to. Ridiculous?
Stop the taxes and you don't repair roads and bridges...
It's not quite that simple. There are certain commodities known as essentials that do not swing freely on the supply and demand pendulum.
For example, it doesn't matter how high the price for food goes because of short supplies, the demand for food will not drop below a certain minimum level, because it is an essential commodity. At this point, supply and demand laws break down.
Gasoline and other energy commodities are in this category. No matter how high the price goes, past a certain point there will be no corresponding reduction in demand.
This is why price gouging is a real event in these cases.
"...but I paid $66 a gallon for a beer at the last football game I went to...."
I bet they could raise the price another 20 bucks before they take a hit.
We don't NEED to buy bottled water, but we do.
------
But we DO NEED gasoline to get to work or take a someone to an emergency ward. And most of us have no choice.
Nice rationalization for being ripped off -- we can opt for MANY ITEMS in our life, but NOT fuel. There is NO COMPETITION in the gas market, so that we might pick and choose and there is NO alternative transportation for most of us. Totally different situation. Apples and oranges.
What a wonderful example.
The hopeless preaching to the helpless.
The setting:
Cry Baby Heaven.
If we had it your way, last week the gas stations in Atlanta all would have run out of gas, and then the gas stations would not have been able to afford filling up their tanks.
As long as we're at it, can we make tax gouging by government illegal? ;)
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