RSSGet Ready For The Big Oil Scare of 2007
J.J. Jackson* | February 21, 2007
Spring is just around the corner and already the stories of “$3.00 Gasoline” are starting. As though it takes a rocket surgeon or some great omnipotence to know that prices at the end of spring and through summer are going to be higher than they are now.
Remember this however. Due to government regulations refineries are starting to get ready to produce the infamous “summer blends” required by all the little bureaucracies around the United States. Some refiners have to produce upwards of a dozen such blends at any given facility.
Now what happens when you take a 1,000,000 gallon a day refinery and make it a bunch of little 100,000 gallon a day refineries by legislative demand?
Give yourself a cookie if you said that you decrease supply of gasoline available to any particular region (because you cannot use other gasoline there) while demand increase. Now give your self another cookie if you answered that this causes prices to rise.
But just be warned that you will undoubtedly hear stories about “price gouging” and the “big oil” companies sticking it to the little guy while few other than myself will be pointing out the economics and the government interference that causes this. And don’t forget to look at how much you are paying per gallon in state and federal taxes on that gasoline you are buying either. For some of us (like here in Pennsylvania) taxes are upwards of $0.50 per gallon.
But before you complain too loudly make sure to take a look at your 401k and other investments and make sure you are not invested in the oil companies. You probably are. And you probably won’t like it too much if they are not able to make a profit.
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7 Responses to “Get Ready For The Big Oil Scare of 2007”
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As a libertarian-minded guy, would you like to see government subsidies to oil companies stop? Because I think that would raise oil prices more than the current government interference.
Even with taxes, Americans pay far less for gasoline than most other industrialized countries. For that reason alone I think people should keep their mouths shut when prices hop around.
What you call “subsidies” are in reality compensations that are only necesassary because of said government interference in the first place. And even then, the small amount of subsidies that oil companies recieve don’t negate all the costs incurred by government. What I am not sure that you understand is exactly how much the government meddling with industries costs.
If we remove the obscene regulatory costs that companies like the oil industry are saddled with (often needlessly) you would not need to subsidize them at all through things like minor tax breaks, etc. If we would let states like Alaska use their land to drill on without other states like Tennessee telling them no by voting against it in Congress and allow the free markets to work you might be pleasantly surprised.
Right on Ron … and as your namesake once said:
“[G]overnment’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” - Ronald Wilson Reagan
Cool, and great info. Thanks for responding to me like I’m a human this time.
So do you support a completely free-market economy, without any interference and regulation? Because my economics side wants to support that sort of thing, and my social side says such a system would leave a lot of people out of the loop.
Grant, you are responded to as your comments warrent. When you’re not running around talking about how God is a communist you get responded to in an appropriate manner.
As for your second point, you really have to define “free-market”. Because there are different levels of “regulation”. For example, the USC tells exactly what the Congress is allowed to regulate but also says that the States and the People retain all other rights. So then you have to go to the State Constitutions.
There will always be some “reglation” but those regulations should only be to protect the unalienable rights of man and should never interfere with the unalienable rights of man at the same time. When someone harms another person and that harm can be shown then you have by default a “regulation” of that activity. But no regulation should ever be made to dictate how people can contract with one another for products or services that do not interefere with people’s rights of course.
So where is a line drawn on regulation? As we’ve seen for the past 150 years, the Constitution has been interpretted many times in the name of “not harming” individuals. People are going to argue that anti-trust laws and regulations on big businesses protect the consumers and other portions of industry and stuff like that. I guess I want to know what you define harm as then?
I think he answered your question. He said: “There will always be some “reglation” but those regulations should only be to protect the unalienable rights of man and should never interfere with the unalienable rights of man at the same time.”
Examples:
You cannot murder because it infringes on the unalienbale right to life.
You cannot pollute the river that is used by people downstream because you are causing harm to property.
Etc.