Saturday, April 29, 2006

Relief For Gas Prices Or Buying Votes?

From the AP comes this story.

Essentially, Congress is grandstanding for mid-terms. They seem to think that a gas tax rebate is in order, which I will gladly take graciously, if it is offered to me. Who wouldn't?

But honestly, it isn't going to help much. Anyone that has payed attention in a basic microeconomics course, can see it. But that isn't the big issue here. That would be, Congress has no business in the oil business or any other business, for that matter.

Where would it end? The drug companies? Dairy products? The gas companies' profit margins are 8.5 percent. Want to see the industry collapse? Then just cut that even lower. Stocks will de-value, a selloff may occur, but may it not even be worth buying. Who wants to own stock that doesn't make money? That's why you buy it, right?

How about price controls?

That's it. Let's just create some long lines at gas stations right as we get into summer. Waiting, waiting, waiting for a long time, in the heat. Think of the daily fights. Take a trip down memory lane and pretend you are in the 1973 Arab oil embargo. Pop in a Led Zeppelin CD and wait for your turn at the pumps.

No thanks. I say leave it alone and change our behavior, at least until someone smart enough comes along and actually tries to find some alternative methods to carbon-based fuels. The precedent an intervening Congress would set, would not be one we want to set.


All_I_Can_Stands said...

change our behavior
This is something we need to take seriously. We forget that conserve is the first part of conservative. We drive short distances instead of walking and do not carpool like we could. I currently have a schedule that does not allow me to carpool with someone in my area, but by summer I think I will be able to at least 2-3 days per week.

Of course, there are other areas that need changing:

- we need to be able to explore for more oil. Apparantly China is now going to get oil off the coast of Cuba (just 70 miles from the US). If they can do it, we can too.
- we need more refining capacity.
- we need to expand using alternate fuels.

Mustang said...

To accomplish what you suggest, Popeye, assumes that oil companies are willing to reinvest their gigantic profits back into infrastructure.

No, they won't do that because it would necessitate raising gasoline prices even more in order to maintain their current level of profitability.

Here's a thought: Gasoline prices can only get worse.


A.C. said...

The bottom line here is the bottom line. Even at a 10 percent ROI 32 billion a year is still 32 billion dollars. If they refuse to put a chunk of that money back into something more productive or altrustic while troops are out putting their lives on the line securing areas where they want to do business, and gas prices don't change, people will remain angry.

And as LA says, it will increase the chances that Congress might decide to mess everything up by acting.

Always On Watch said...

What OPEC is doing is ecnomic jihad. The American oil companies are reaping a windfall.

Congress is grandstanding with the "gas tax rebate."

Yes, we need to change our energy-consumption habits. But the fact is that developing sources other than Middle Eastern oil has been neglecting by both political parties. Add to that the greenies and their agenda.

We sure as hell don't need Congress butting into private business. After all, every time the government butts in, things get worse. Besides, Congress can't find their own asses with a roadmap and all their many money-grubbing hands.

LASunsett said...

I think all of you make some excellent points. It just goes to show that this is one complicated issue.

There is no one single cause that if eliminated, will make much of a difference. The answer lies in a combination of things, one of which, is NOT the government intervening.

One thing that is catalyzing the rise in prices right now, is the Iran situation. It's not the only thing, but has not been much help, that is for sure. Speculation on oil futures does not look to improve, as long as the Iranian president keeps issuing his threats of the day.