Tuesday, May 9, 2006

Ron Paul on gas prices

It may not fit in a sound bite, but it's right.

Paul points out correctly that gas prices are a function of supply and demand, the market at work. They are always trying to reach a 'market clearing' price, the price at which the gas station's tanks are empty just as a truck pulls up to refill them. (It's a little more complicated than that because of the ancillary items people buy when they stop to get gas, as well as competition and government meddling, but it's good enough for now.)

Most people understand that federal restrictions on exploring, drilling, and refining domestic oil have made us dependent on various questionable Middle East governments. We should expand this into a greater understanding of how American foreign policy increases gas prices here at home. Before the war in Iraq, oil was about $28 per barrel. Today it is over $70. Iraq was a significant source of worldwide oil, but its production has dropped 50% since 2002. Pipeline sabotage and fires are routine; we have been unable to prevent them. Furthermore, the general instability in the Middle East created by the war causes oil prices to rise everywhere.

This is another one of those 'I told you so' moments for those of us who were against the invasion of Iraq from the get go. The invasion isn't the only reason for the increase, and we don't know what may have happened without the invasion, but I'd bet what it costs to fill up my tank that prices would be lower now had there been no invasion.

If we want to do something about gas prices, we should demand greatly reduced welfare and military spending, a balanced budget, and fewer regulations that interfere with the market development of alternative fuels. All subsidies and special benefits to energy companies should be ended. We also should demand a return to a sound commodity monetary system.

Quite a sound argument can be made that the government regulation of the market is the reason there are not alternative fuel sources for transportation, or other means of transportation than the internal combustion engined automobile. It is also very important to note the need for a sound monetary system. Basic Economics - print more dollars with nothing but faith and credit to back them up, and each of those dollars buy less stuff.
And in the meantime, let’s eliminate federal gas taxes at the pump. That alone would save Americans 18.4 cents per gallon. By contrast, oil companies only make about 10 cents per gallon. So maybe it’s government that’s being greedy.

You should be offended any time some moron refers to what gas companies do as 'profit taking'. No profit = no gas. And they don't take their cut by force like the government does. Who's the criminal?

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