House Passes Gasoline Gouging Bill and Proves that They Are Ignorant About Economics
Yesterday, the House passed a bill that would make gasoline price gouging a federal offense. How does the House of Representatives, in their infinite wisdom, define gouging?
(1) IN GENERAL- It shall be unlawful for any person to sell crude oil, gasoline, natural gas, or petroleum distillates at a price that--(A) is unconscionably excessive; or
(B) indicates the seller is taking unfair advantage unusual market conditions (whether real or perceived) or the circumstances of an emergency to increase prices unreasonably.
So who defines "unconscionably excessive"? Since when was there anyone in Congress with a full understanding of the economics of gasoline and the entire supply chain to be able to definitively state what the price of gasoline should be?
This is exceeding foolish legislation that ignores the basics laws of economics. The law of supply and demand dictates that prices must rise when demand rises. This is a basic economic fact that isn't open to interpretation.
As a result there is a fairly obvious solution to rising gasoline prices - STOP DRIVING. The great irony here is that while there is much talk about decreasing our dependency upon oil, this bill ensures that we will continue our dependency upon oil. Those clamoring for more hybrid cars and a more "green" energy policy should be calling for higher gas prices if they were honest. A corrollary to the law of supply and demand is that increased prices will create a decrease in demand. Isn't that what we want???
Technorati Tags: Domestic Policy Economics Politics congress house of representatives gasoline gasoline gouging economics
Agreed. From an energy
Agreed. From an energy policy perspective, the best move is probably to let gas prices rise to insane levels - only then will people stop driving. And along the way maybe we'll get some better public transportation and more energy-efficient vehicles.
I understand though too, why they're worried about the impact of gas prices on consumers. Some people, say poorer workers who live in areas with no public transportation, may not be able to readily decrease their demand. Even many more wealthy people live in places where there is no decent public transportation, though some of them might be more able to decrease demand in other ways like acquiring a more efficient vehicle or moving closer to work. So perhaps their adopted policy has some arguments for it too - or rather, it might, if it wasn't for that pesky supply and demand curve.
On the bright side, such legislation could conceivably end the supply of nearly all gasoline to consumers by forcing out suppliers or by causing severe shortages, so, you know, it might get there even faster than merely raising prices would. And it might even take out some of those pesky oil corporations...
However, it seems it's unlikely to ever be enforced - this sort of legislation rarely is. Ultimately this is in nerely yet another style-over-substance bill.
Politics as usual
I can't get your link to open. It is probably a traffic problem!
People in America do not understand economics any better than they understand physics, even though both are essential aspects of their lives. You know that this will not effect gasoline prices in any real way, but is a measure designed to keep ignorant constituents off their legislators' backs.
I wanted to see how this bill was meant to be enforced. Patience pays off when accessing the link. Perhaps this is intended as a revenue enhancement bill? Or it is an attorney general career enhancement bill. All we need is a few economically ignorant state attorneys general and we can wreck havoc in this industry. It might have the same effect as not driving, but would be more politically satisfying to angry drivers.
Bad Idea
The problem is that the public loves bills like this. They don't understand that even big oil companies, powerful as they are, are at the mercy of the market. Big oil (outside of cartels like OPEC) cannot control the price of gas. And if they set their price above or below the market price, it's actually bad for both themselves and ordinary people. Misunderstanding around this topic is so pervasive that it's hard to blame Congress, though they should know better.
I know some conservatives that do agree that there should be price controls during emergencies. But I disagree. Even in an emergency, should gas go to the people who show up first and buy at an enforced low price until it runs out (like in the 1970's), or should the market let people buy gas at its true market price, and make their own decisions about whether they still want it?
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