Skip to comments.Barking about gasoline
Posted on 09/12/2005 2:38:19 AM PDT by Crackingham
What is it about the price of gasoline that turns seemingly normal politicians into barking economic demagogues?
When Jill puts her house on the market for $450,000 -- triple what she paid 10 years ago, but the going price in her neighborhood today -- the politicos understand that the 200 percent markup is the result of supply and demand in the real estate market. Senators don't call press conferences to denounce Jill as a profiteer. Attorneys general don't threaten to prosecute her. Governors don't compare her to looters.
But when Joe's service station ups the price of gasoline by $1 a gallon, the political world freaks out. Never mind that a Category 4 hurricane has devastated oil production throughout the Gulf Coast, depleting the nation's already strained refining capacity by 2 million barrels a day and driving up the price Joe's wholesaler is now charging him. For some reason, politicians forget everything they learned in Economics 101, and rush to savage Joe for "gouging" his customers.
Republican Governor Sonny Perdue of Georgia, for example, issues an order imposing penalties on gasoline dealers who charge more than he thinks they should. "I do not believe there is an energy emergency in this state," he announces -- as if Georgia is magically shielded from the forces that drive gasoline prices in the other 49 states.
In Massachusetts, Governor Mitt Romney -- a Harvard MBA who didn't make a fortune in venture capital by pretending not to understand how markets work -- takes to the microphones to denounce the alleged gouging as "white collar looting" and urges motorists to turn in offenders through a state hotline. Another GOP governor, Missouri's Matt Blunt, excoriates gasoline "profiteering" as "both unconscionable and illegal." Even President Bush gets into the act, demanding "zero tolerance" of lawbreakers -- a category into which he lumps looters, insurance swindlers, and poor beleaguered Joe, "price gouging at the gasoline pump."
Then there are Democrats like Governor Richard Codey of New Jersey, who vows to inflict "maximum penalties" on overcharging gas stations, which he estimates at 1 of every 4 in his state. Senators Maria Cantwell of Washington and Carl Levin of Michigan call for something even more unwise -- a revival of gasoline price controls, like those Richard Nixon and Jimmy Carter embraced 30 years ago.
But artificial price caps will work no better now than they did in the 1970s. They won't get petroleum refined faster. They won't reduce motorists' demand for gasoline. All they will create is shortages -- the one thing price controls invariably bring in their wake.
There is only one rational and efficient way to allocate a scarce commodity: through price. That is because the more a person values something, the more he is generally willing to pay for it. By charging what the market will bear -- for gasoline or anything else -- vendors channel their product to the customers who value it the most. A mandatory cap on the price of gas may seem like kindness to the poor, but all it will do is raise demands that can't be met. The result will be "Sold Out" signs on Joe's pumps, or gasoline lines stretching around the block.
"If there's not enough fuel and you put a cap on," former President Bill Clinton said recently on CNN, "then what you might do is just drop the supply even quicker, imposing greater hardship on people." He gets it. Why don't the others?
The biggest shock is that Bubba gets it. He needs to have a talk with Maria Cantwell (she's introducing a bill that will allow the president to put caps on gasoline.)
The oil industry is operated by a few and supply and demand is just a fraudulent facade used by all politicians to hide the dire position this country is in regarding oil.
Gosh, Jeff, did you have to use Clinton to make your point?
"WTF" describes it pretty accurately. I had that graphic, but after a while the host pulled it. Ingrate!
I got it in an email
and hosted it myself
so feel free to use it.
Why, thanks-- let's give it a try:
Sticker Shock-$3 a gallon gas? Click the picture:
Works for me
I really have issue with all of this gasoline price gouging. I understand free market, I agree with supply and demand. I work in the blood industry.. So to put this into perspective. Let's say we have a decline in blood products... happens every day somewhere. Lets start charging triple for that blood for all those open hearters and infant transfusions.
Won't happen because we aren't allowed. I don't understand why we cant charge triple for O Neg. And those units which are free of specific common antibodies, man our entire organization could get raises and own beachfront Mcmansions.
I wouldn't want to be a part of something as horrid as that.
People, gasoline is critical for everything we do as a nation. It should be self regulated like we regulate blood.
You can rest assured that we won't ever tell you or your family "sorry we are short on that today, tanks are out, manufacturing capacity is short today because the lab had a major equipment failure."
Why is oil any different?
Remember that next time you meet someone who had a bypass.
And you can flame me till u think I am toast... I am tougher than that so its just a waste of your time.
"We don't have any blood for you today, but at least it's the same price as it was yesterday"
Having said that: here in Britain we give blood: it isn't governed by market forces. I'm not saying that's a good thing, that's just the way it is here.
But nobody's forcing them to buy that house. I realise that no one is "forcing" me to buy gas either but if you want to work and eat, there's no choice. It's when the prices stay up for so long that it's an issue. And it isn't like this is the first time it's happened. If there wasn't such a well established history of known price gouging, people would be a lot less likely to suspect and accuse when it's legitimate.
Jill's house took years to triple in value. And there are plenty of other houses for prospective buyers to look at. Unlike the gas gouger, whose prices tripled OVERNIGHT, and who is "competing" with the station across the street, whose prices also tripled.
He's also been out of office for five years. If he were currently serving as an elected official, you can be damn sure that he'd be singing a different tune.
The comments by the New Jersey governor are perhaps the most bizarre of all. It is impossible for "one in four gas stations in New Jersey" to be gouging their customers. The state is so small and densely populated that I'd estimate that 99% of the population lives within a ten-minute drive of at least three stations. The 25% that are allegedly gouging their customers would be out of business in a week.
It's amazing after all the speculator hype we haven't run out yet? The difference in housing and gas is competition. If someone doesn't want to pay $300,000 for a house then go to another neighborhood where prices are $150,000. With gas the most competitive difference is about 2%.
Why is beef any different, why is milk any different, why is lumber any different, why is a brand new Harley any different?
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