Better And Better

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Thursday, March 20, 2008

A word on "gouging."

My friend Tamara points out that Indiana has created a law against gasoline price gouging.

While I was at the gas station the other night, the clerk was complaining about the high prices, and how "somebody oughta do something."

Friends, I'm going to say it again: "gouging" is a made-up concept, put forth by people who would prefer to see some socialism.

Do you want a command economy?

Look. If I have a product, you you want that product, and I invested a lot of trouble and money into getting that product, why shouldn't I get to decide what I want to sell it for, in a manner that makes me the most profit?

To say that "the government oughta do sumpin'" is to fail to understand a free economy. You want the oil companies to keep selling? Well, it's got to be profitable for them. Oh, you want our government to subsidize oil companies? Well, shucks-- we've already done that, and that amounts to the same thing, anyway.

It's a global economy. Within a very few years, China will be consuming as much oil as the US. Well, everyone's using oil, and has money to spend to purchase it. That means the price of a gallon of petrol will rise.

Supply stays constant but demand increases: price goes up.
Supply decreases and demand increases: price goes up RAPIDLY.

This is not a new concept, people.

Do we need to work on methods of conservation? Sure.

Do we probably need to make special arrangements in bona fide emergencies? Sure.

But the simple fact that prices have gone up does not constitute an emergency. It just sucks, is all.

That is all.

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7 Comments:

At Friday, March 21, 2008 6:21:00 AM, Blogger Old NFO said...

Matt, another point a lot of people miss- Exxon and most of the other majors are owned by shareholders, e.g. US... If you have a 401, mutuals, or stocks the odds are you have shares in Exxon and/or another oil company. If their profits go down, so does our retirements...

 
At Friday, March 21, 2008 7:25:00 AM, Anonymous Blackwing1 said...

There was an interesting article in the Wall Street Journal yesterday on food riots in Middle Eastern countries. The people were upset that the cost of some food-stuffs were doubling or tripling.

It's interesting to consider WHY, in relation to oil prices.

1) As oil prices go up, in general everything else goes up as well, since the cost to produce (think of fueling a tractor) and transport (think of fueling a truck/train/ship/plane) goes up as well.
2) As oil and natural gas prices go up, their cost relative to other sources goes up. Alternatives, which were once MORE expensive, are now cheaper.
3) Add in the dot-gov meddling in the marketplace, and throw in some massive subsidies for corn-based ethanol, and the price of basic food-stuffs goes up even higher.

What will be fun is to see if the primary producers of oil (the Saudis chiefly among them) that DON'T produce enough food internally to feed their populace, realize what's going on, and increase their production to match the demand a little more closely, in order to drop the cost of their imported food, in order to save their phony-baloney jobs, harumph-harumph.

 
At Saturday, March 22, 2008 7:40:00 AM, Anonymous TBeck said...

Walter Williams makes an excellent point regarding "gouging" during emergencies such as hurricane evacuations.

Roughly paraphrased, raising prices during these events not only reflects the temporary scarcity of the commodity but also creates a self-imposed rationing.

Ex: If I need to get two hundred miles inland and gas is $20 a gallon, I'll probably buy only enough to get to where I need to go. If that same gas is $3 a gallon, why not fill up the tank?

The former situation helps to ensure that the limited supplies are available to a larger number of people due to reduced individual consumption. And this is accomplished without any governmental intervention.

It's like some invisible hand is guiding peoples' actions or something...

 
At Sunday, March 23, 2008 5:50:00 AM, Blogger GUYK said...

yep, supply and demand drive the market when governments step back and let the law work..but governments are created to regulate the law of supply and demand and of course regulation has never been completely successful.

One thing that many of us can't seem to understand is that labor is in fact a product just as gasoline and soy beans are products and the cost of labor should be allowed to rise and fall with supply and demand..but we have a government that regulates the cost of labor and makes laws to subsidize labor at business expense..and then wonder why business moves out of the country to a place where they can make a profit..

 
At Sunday, March 23, 2008 7:55:00 AM, Anonymous Anonymous said...

Two things that most people don't want to learn or don't understand. The oil companies don't set the price of gas, it is traded on the futures market just like gold wheat and orange juice. They just sell it based on the price on the open market. The other thing is that oil is not the problem, refineries are. We have not built a new refinery in this country since the 70's. We have lots of oil we just can't turn it into gas fast enough to satisfy demand.

 
At Sunday, March 23, 2008 8:52:00 PM, Blogger Rogue Medic said...

I no longer need to shop for the best price.

The government will pass a law to have those evil gougers refund their money to me to make up for my "overpayment."

If I think the price is too high, I go elsewhere. If others do the same, the retailer with the high prices begins to lower prices to sell that expensive stock. If there are no lower prices, maybe I buy a bit less.

 
At Tuesday, March 25, 2008 2:51:00 AM, Blogger John B said...

Matt, Here in Washington State we HAVE price fixing and gouging. In fact our current governor made her bones going after price fixing oil suppliers in the 70's and 80's.

Did'ja hear? Titan has at least 100 times the petrochemical makeup of the earth? Them are gonna be some hellacious tankers and pipelines....
john

 

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