What should we do about gas prices?
If you are concerned about high gas prices, then buy less gas. Buy a fuel saving car. Use more public transportation. Walk. Ride your bike. Carpool. That’s really all you can do.
What should government do? Nothing. Or rather, get out of the way. Government should lift the ban on drilling in ANWR and other "protected" sites. Government should loosen restrictions on building refineries. Government should loosen restrictions on building nuclear power plants. Government should give tax breaks to companies doing research into alternative fuels. In other words, government should do a lot less than it is currently doing. Government should get out of the way and let the free market do it’s job.
Government should not:
- Offer a rebate to the American people. That’s just "silly". (– Brit Hume). Actually, it’s worse than silly since the shortfall would have to come from somewhere. Wouldn’t it be a hoot if they made it up by increasing the gasoline tax!
- Tax the oil companies more. That’s not just silly, it’s downright stupid. How do you suppose the oil companies would pay such a tax? I think it’s just possible, let see, hmm, they might just increase prices.
- Break up the oil companies. I could understand the anti-trust claim if there were just one oil company. But there are five. Breaking them up just eliminates economies of scale and would probably drive prices up.
- Reduce the gasoline tax. Well actually I think they should reduce the gasoline tax; but not in response to high prices. It’s not at all clear that the oil companies would pass that savings on to the consumer. After all the consumer has already shown what the market will bear, simply by continuing to buy. Americans do not seem to be changing their gasoline buying habits in any significant degree. So, OK, reduce the gasoline tax in order to reduce government spending. Fine. But not to protect consumers from high prices.
- React in any other way. We don’t need a knee-jerk reaction; (i.e. a Knee-dless reaction by a bunch of jerks) just because it’s an election year. What we need is a "hands-off" policy that lets the market work.
By the way, I think it’s hysterical that all these politicians are dancing and leaping and otherwise wringing their hands over high gas prices. Aren’t these the same guys who refused to drill in ANWR? Aren’t the Democrats, at least, always trying to raise the gasoline tax by .25 or .50 per gallon? Haven’t the liberals at least wanted the price of gasoline to be high; because that would be good for the environment, etc. etc.? So, now they got what they wanted! So why are they so upset? Perhaps it’s because they got what they wanted, but they didn’t do anything to get it, so they can’t claim credit. Or maybe it’s just a bunch of jerking knees.
I like it when you comment about market forces rather than about politics because I think you make much more sense (i.e., more rational / less emotional). I think this is a great comment about gas prices.
I have only a minor comment to your great points. I think one may find with market forces that plays a less significant roll than . I think that the essential statement any political body gives to the motive force is a confidence/trust (or lack, thereof) in Rule of Law. That’s it…
A simplistically-worded example is China, which separates its economic policy from its political policy/government type. It’s well known that its government is at odds with America’s in philosopy. Yet, here, market forces are undeniably strong. And, it is China’s huge thirst for oil (as compared to as little as 15 years ago) that is adding “fuel”
to this sector of market (motive) force.
Comment by RScott — May 7, 2006 @ 1:23 am
My sentence above didn’t translate. It was: I think one may find with market forces that fill-in-the-blank-government-type-or-political-policy plays a less significant roll than fill-in-the-blank-economic-policy.
Comment by RScott — May 7, 2006 @ 1:29 am
I usually agree with you, but I must disagree on one point. You point out that ANWR should be drilled, as if that would help gas prices. You also suggest that the gas taxes should be lowered.
I think we both know, that as you say “what the market will bear” will keep prices the same. The oil companies would take in that oil, the oil offshore of Florida, the oil from Iraq, and anywhere else the oil fairy brought it to them, and still leave the price the same. They would take a five cent drop in taxes and maybe drop the price to the consumer by two cents.
In addition, every bit of bad news leads to another increase. We go to war in Iraq, the price goes up. War ends, the price remains up. New Orleans gets hit by a Hurricane, the price goes up. The refineries are brought back online, and the price stays up. Isreal fires some missles into Lebanon, prices go up. Isreal stops, the price stays up.
I am not talking politics here, just the fact that with no competition (five companies, but they are not competing on price) in the market, the price will remain high until they are forced to compete.
Burger King and McDonalds and Wendys are true competitors, changing their prices to compete with one another. The oil companies own the stations they sell to, so there is no competition on price. I can choose which gallon of milk to buy, but the station owners are stuck with one supplier, so it is not true competition. Can you see the difference and how it impacts the consumer? Five Standard Oils is the same as one Standard Oil.
Comment by Aaron — July 19, 2006 @ 9:13 pm
I LOVE YOU SO MUCH UNCLE BOB!
Comment by DANNYROBINSON — February 5, 2008 @ 3:03 pm