I heard this phrase today on Rush LImbaugh's program and really wanted to light upon it. Rush Limbaugh pointed out how in the case of Bear Stearns versus Oil and Petroleum, the government stepped in to save Bear Stearns after they made unsound financial decisions and then this week announced hearings to investigate and regulate oil and petroleum for high prices.
This displays a fundamental misunderstanding of historical economics. As demand increases without commensurate increase in supply, prices rise. The current gas price hike represents a classical demand shift, resulting in a rise in price. The only ways to curb price hikes are to 1: cut demand or 2: increase supply.
Government prefers to cut demand than increase supply, for whatever reason. Over the past few years, the have endorsed conservation, increasing fuel economy, and driving less. In other words, the government wants us to not do what we want to do. While we could drill in ANWR, off the Florida coast like Cuba is, go after Shale oil in Colorado, build new refineries, and lower costs of crude acquisition, the government possesses not even the slightest interest in making more of what we want available to us. Many of the bureaucrats are spoiled children who always had what they want but prefer to deny us commensurate equality in treatment.
An increase in supply would create the classical supply shift, resulting in a decrease in price. No matter what we do, conservation will not work. Our population increases, increasing demand. The world population increases, increasing demand. If we don't go get the oil, other nations will. Besides, I'm already doing my part, but not because the government made me. My 1995 Saturn SL1 on my last fillup clocked an impressive 38.6mpg, far above the 31-33mpg estimated at the time of its manufacture. I do not need to go out and spend $20,000 to buy a hybrid car just to get 7mpg extra economy. Such an expenditure would be illogical.
An even faster way to save us money at the pump would be for the government to permanently or temporarily suspend gas taxes. If you check the rates, you'll see how much of that $3.30 per gallon goes to taxes. Federal gas tax is $0.184/gallon, and in Nevada, my state charges $0.23/gallon tax, plus another $0.10805/gallon in county taxes, inspection fees, and cleanup charges. I last bought gas for $3.33/gal, which means my total tax was $0.52205/gal. If they removed taxes, it would have only cost me $2.80795/gal. Taxes accounted for 15.7% of the price of fuel today, and those taxes are why we will never see $0.99/gal prices ever again.
Bear Stearns loses it's shirt, and the government hands them a check. Chevron makes money, and they want to take away their coat.
Oil is the fuel of liberty. The government doesn't want you to be free, so they are not going to do anything whatsoever to help you be free. In point of fact, the tell you you ought voluntarily restrict your own freedom via conservation. Today they say, "Don't do what you want." Tomorrow they say, "Only do what we allow."
**throws some tea in the harbor**
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