Gasoline prices have risen sharply over the past couple of weeks. On my bicycle ride to work this morning, I saw regular unleaded priced from $3.19 to $3.51 a gallon in my area of California. People are blaming Republicans, Democrats, Big Oil, Environmentalists, and OPEC. The usual proposals to investigate Big Oil, impose price controls, and suspend gasoline taxes all ignore the true conspiracy.
A very large number of Americans -- many of them posing as Patriots, Conservatives, and Liberals -- work together to undermine the American Way of Life by consuming huge quantities of petroleum, a limited resource. Worldwide demand for gasoline has jumped over the last year, while petroleum production remains static to dropping (mostly due to geographical constraints). In the U.S., warm, spring-like weather has induced millions of Americans to drive to their outdoor activities, spiking domestic demand just as refineries make the switch to the summer-blend of gasoline.
Folks, the price of gas has gone up because you are burning so much of it! Reducing the price through price controls or tax suspensions will only increase the demand, resulting in real shortages. Yes, oil companies are making record profits, but in our market economy that's how we control the demand. If price controls are imposed, then quotas must also be imposed on consumers for gas purchases.
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Ok -- so -- what drives the price of fuel? The market. Are we willing to pay $5 a gallon for it. Yes. Am I?
ReplyDeleteI'm not. I didn't even realize the price had gone up. What was it that Al Gore said? Find the courage to change?
I want to get eco-green-credits for riding my bike, Al?
Good post Fritz. Gas here in South Carolina is still very cheap, well under 2.50/gal currently. Unfortunately, we have some of the lowest state gas taxes in the country, but that doesn't stop many residents from appealing the Governor to temporarily suspend the state gas tax. That is a completely absurd idea when those measly taxes don’t even begin to cover the cost of maintaining the automobile’s infrastructure.
ReplyDeleteI also don’t understand the public support for price controls. You would think that in a red state like this one, a majority of people would want to see the free market economy at work, but that does not seem to be the case. No other product is as competitive as gas at the retail level. Try price shopping for a gallon of milk with out even leaving the road. I say, let the oil companies charge whatever they want. At some point, consumers will chose not to buy the product and the prices will come in line with what the public is willing to pay. Furthermore, if gas prices eventually rise to what I consider a reasonable level, people will demand fuel-efficient vehicles and car companies will provide the products to supply that demand. I am all for smaller cars and safer roads, so I would be happy to pay 6 bucks a gallon when I need to use the car.
Thanks for the comments. I didn't realize SC was one of the states looking at price controls. Some California legislators are talking about.
ReplyDeleteDoesn't anybody remember the gas lines from the 70s that occurred as a result of gas controls and rationing. Making a scarce resource cheaper will make it even more scarce.
Problems with the market setting the price of gas does result in inequity, unfortunately. The poor are disproportionately affected, for example. I know a lot of working class people who live in cheap housing miles and miles from their work, living in areas that are not well-served by public transit and "alternate commute modes" programs. They're stuck with the high prices.
Eco credits: Congressman Earl Blumenauer will introduce a "Bike Commuter" bill tomorrow to encourage employers (through tax breaks) to provide financial incentives for bike commuters.
Remember the days (like, two years ago) when everyone was in an uproar because gas was shooting up to almost 3 bucks a gallon? Well much like the frog that stays in the water that is slowly brought to a boil, people are sitting idly by while prices creep ever closer towards $4. I was riding in a car with a friend this morning and he stopped for gas. He was leaning against his car, watching the digits on the pump climb past $30 and he said, "man, I'll bet you save a ton by riding your bike." Ummm, just a bit. The world looks a lot better from the seat of a bike.
ReplyDeleteI'll second that -- THe world looks better from the seat of a bike.
ReplyDelete