Why Are Gas Prices So High?

September 2, 2005 at 7:42 am | Posted in General | Comments Off on Why Are Gas Prices So High?

I just paid $3.29 last night and felt lucky because I had just passed 4 stations that were at $3.39. Gasoline prices are the biggest and simplest lesson in Economics 101 that we can have. A bigger supply tends to lower prices and a bigger demand tends to raise prices. Right now during the aftermath of Hurricane Katrina we are seeing a restriction in the supply of gasoline. This is what is making the price go up. The price will continue to go up as long as we, the consumer, continue to pay it. Am I an advocate of the one day boycott? No. That is a symbolism over substance action that has absolutely no impact on anyone. As a consumer, your choices are simple. Choose to change your lifestyle and vehicle so that your demand for gasoline is less or buck up and pay.

What can be done to increase the supply?
Simple things like exploring the domestic oil deposits. The US has a number of places where a huge supply of oil is available but our government and the environmentalist wackos have done everything they can to prevent access to it. All of this is based on the belief that we humans are powerful enough to make significant global change to the planet.
Another simple thing is eliminating unnecessary government regulation. Can someone explain to me why there are 40 different blends of gasoline required for 50 states? This restricts supply regionally because one blend cannot be used in a different region. It also restricts the supply nationally because these blends come from a fixed set of refineries.

The current problem is 100% a supply problem and it will only get worse before it get better. This is because the fixes will take time. The fixes will also meet extreme resistance from the left wing wackos. The resistance will happen because the people who hate President Bush would rather live with the problem than let President Bush get credit for fixing the problem. I predict there will also be huge protests all over the US when drilling starts in places that it hasn’t been allowed before. By protest, I mean some of the kookiest stuff you have ever seen.


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