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May 20, 2007
The real price gougers
George Will brilliantly explains the folly of governmental initiatives to control the price of gasoline and, in so doing, exposes the true price gougers:
[House Speaker Nancy] Pelosi announced herself "particularly concerned" that the highest price of gasoline recently was in her San Francisco district -- $3.49. So she endorses HR 1252 to protect consumers from "price gouging," defined, not altogether helpfully, by a blizzard of adjectives and adverbs. Gouging occurs when gasoline prices are "unconscionably" excessive, or sellers raise prices "unreasonably" by taking "unfair" advantage of "unusual" market conditions, or when the price charged represents a "gross" disparity from the price of crude oil, or when the amount charged "grossly" exceeds the price at which gasoline is obtainable in the same area. The bill does not explain how a gouger can gouge when his product is obtainable more cheaply nearby. Actually, Pelosi's constituents are being gouged by people like Pelosi -- by government. While oil companies make about 13 cents on a gallon of gasoline, the federal government makes 18.4 cents (the federal tax) and California's various governments make 40.2 cents (the nation's third-highest gasoline tax). Pelosi's San Francisco collects a local sales tax of 8.5 percent -- higher than the state's average for local sales taxes.
To understand how gasoline prices are set, read this.
Posted by Tom at May 20, 2007 12:01 AM
Comments
I didn't even begin to think about the taxation the government has on gallons of gasoline! Since the beginning of the gas price increases, has the government increased their taxation?
Posted by: Steve Castaneda, Realtor ![[TypeKey Profile Page]](http://blog.kir.com/nav-commenters.gif)
at May 21, 2007 2:22 PM
I'm in theory supportive of this reasoning, but that doesn't excuse bad math. "Oil companies" make more than $0.13 on a gallon of gasoline. Currently, just the refiners make more than that. You also have to add in the profits the crude oil producers, transporters and retailers make as well.
I'm not going to sit here and call the profits excessive (I don't think they are for a cyclical peak in a capital intensive, risky business), but they are higher than $5.50 a barrel.
Posted by: pix3 at May 22, 2007 11:28 AM
Tom:
I can't remember if you had talked about this site before: http://www.mises.org/story/1936
I think it is right on in regards to this issue.
Posted by: Dennis Bailey at May 22, 2007 9:04 PM
This is a great article. The Chinese government is enacting the same type of policy. They're currently artificially holding the price of oil around $60/barrel to help the economy. Doesn't help in the long run!
Posted by: Houston Homes at November 28, 2007 12:57 PM
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