Common Folk Using Common Sense

Trackbacked at basil’s blog, New England Republican:

President Bush has decided to order an investigation into high gasoline prices. This is in response to an ignorant public that demand politicians “do something” about high gas prices.

Just like with the other calls for investigations into price gouging this will go nowhere. A lot of money will be spent investigation oil companies – and just as a bunch of times before, no evidence of any such price gouging will be proven to have taken place.

Besides, what is price gouging anyway? Can you define what is “too much profit”? It’s just a buzzword used by the anti-capitalist, government-educated among us.

First you have lots and lots of oil wells all over the world owned by many, many people. Then all those barrels are transported to various refineries all over the world, all owned by many different companies in several different countries.

Then the tree-hugging crowd has demanded that there be 55 different gasoline blends to be sold in various municipalities, depending on their air pollution level. That’s why gasoline in Montana is much cheaper than in Los Angeles.

Now you get the gasoline to a gas station, probably an independent dealer.

And all those people have, under the cover of night, gotten together and conspired to raise gasoline prices to specific levels? Are you on crack?

And now welcome to the Supply And Demand economic concept. The supply of crude oil and refined gasoline is limited, but the demand is increasing worldwide. This leads to temporary shortages and higher prices. It’s not Bush’s fault, and it’s not the fault of the oil companies. If you want someone to blame, try the environmental lobby that fights any and all exploration for new sources of crude oil.

From Captain Ed at the Captain’s Quarters [emphasis mine]:

Bush can call for all the investigations he wants, but all he will find is a ridiculous American energy policy that practically guarantees our inherent risk of market manipulation and foreign extortion. With the price of crude oil topping $75 a barrel, it doesn’t take an economics genius to understand why the price at the pump keeps going up. China’s demands on worldwide production have contributed mightily to that increase, and it will continue getting worse as China expands its industrial base.

Until we find ways to produce more crude in order to get more oil onto the market, the prices will continue to increase. Oil is, after all, a commodity — a free-market product that will fetch the best price possible in trade. The more oil produced, the cheaper it will become. That mechanism does not rely on cost, either, except to the extent that high production costs would lower the amount of oil in the marketplace until prices rose high enough to cover the overhead.

If the US would start producing its own crude oil, then global prices would start dropping due to the increased worldwide supply and the drop in demand. We have vast fields of petroleum available for this purpose. Both coasts have proven oil deposits, and the Alaskan arctic area has stood ready for years to produce crude. In the case of our deposits off of the Florida coast, others such as Cuba may exploit those reserves instead. However, environmentalists refuse to allow for this production, forcing us to buy our oil elsewhere, artificially propping up prices and surrendering to the instability of the markets.

From Neil Cavuto’s article at FOXNews.com:

The oil companies’ profit works out to nine cents a gallon.

The Government’s profit works out to fourty cents a gallon.

• If you want to bring gas prices down, start offering solutions and stop playing games and name-calling.
• If you want to bring gas prices down, start opening areas for more oil exploration here, so we don’t rely on oil from over there.
• If you want to bring gas prices down, start ending the environmental catchpenny of blended fuel mandates, that’s done squat to clean our air but done tons to sully our wallets.
• If you want to bring gas prices down, start removing the restrictions that prevent companies like Wal-Mart from selling more gasoline here.
• If you want to bring gas prices down, start demanding the same accountability of our tax dollars that you do oil giants’ dollars.

gasoline, gas, oil

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