Friday, September 9, 2005

Another public official demonstrates his economic ignorance...

I don't understand how someone makes it to 'Governor' without a basic understanding of Microeconomics.

The Governor of Maryland is 'not satisfied' with gas prices.

Mr. Governor, may I suggest a night class at one of Maryland's fine public universities. In the meantime, let me help you out a little.
"I understand a spike (in prices) as a result of a hurricane. I do not understand why Maryland has to be a top five or top 10 state," he said. "It's an intolerable situation."

Because Maryland is always a top 5 or 10 state. Why? Taxes, and the rediculous formulation requirements due to the clean air act (the same rediculous requirements that put the known carcinogen in gasoline that leaked out of a tank that made a bunch of people sick, although we continue to blame the mean old oil company).
Drew Cobbs, executive director of the Maryland Petroleum Council, said prices in Maryland are driven by supply and demand and also by the fact that Maryland is required under the federal Clean Air Act to use a clean burning fuel that is more costly to produce.

"That does not give us much flexibility," he said. "We can't just run across the state boundaries and grab somebody else's gas."

Ehrlich asked the Environmental Protection Agency last week for a temporary waiver from the requirement that the cleaner burning fuel be sold in the state. He said he has not gotten a response from the EPA.

Unfortunately (but not suprising at all), Mr. Ehrlich did not suggest gasoline taxes (or are they 'fees' too?) in Maryland be lowered. He also did not suggest repealing the Maryland law that makes it illegal to sell gasoline for less than the wholesale cost, which doesn't allow the market (supply and demand, which you'll learn about in your class) set the price.

At the end of the day, gas prices are set at the point where gas stations sell the most gasoline possible for the most profit. Just like the price of milk, bread, cars, computers, etc, etc, etc.

Econ 101. Seriously.

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