Straight from the 1970's, the US's golden era of bumbling government intervention in the economy, come the same proposals that worked oh-so-well the first time around. Democracts blame big oil for gas prices, and propose channeling solutions from Hugo Chavez: (via Q&O)
Congressional Democrats are taking aim at big oil companies as U.S. gasoline prices near a record average $3.05 a gallon.
industry experts doubt it will have any effect, half a dozen senators
gathered in front of a Washington service station to push their own
remedies to the situation, the Washington Post said.
The latest average price for a gallon of unleaded regular gas was $3.042, according to the AAA Fuel Gauge report.
Charles Schumer, D-N.Y., called on Congress to consider breaking up the
giant companies. Sen. Bernard Sanders, I-Vt., pushed for a windfall
Sen. Maria Cantwell, D-Wash., promoted her
anti-price-gouging bill, which the Senate Commerce Committee adopted
earlier this week.
Gee, since every transaction in a free market requires a willing buyer and a willing seller, wouldn't it be just as correct to blame profligate consumers for the increase? And why is it I don't remember any of these actors in Congress rushing to clamp down on greedy sellers when home resale prices skyrocketed far more than gas prices have? Does anyone remember Maria Cantwell imposing windfall profits taxes on home-sellers? Or, for that matter, on sellers of Internet stocks who financed their campaigns selling stock above $80 that would soon trade only in the single digits? And by the way, how can any party who elected Maria Cantwell to the Senate seriously call members of the other party "stupid."
Let's do a thought experiment. Let's assume that through a series of government actions, Congress is able to return oil profits "to the people." Oil company profits are now reduced to zero. That should make a huge difference in gas prices, right? Well, out of a $3.00 gas price, taxes and the retailers margin are probably 75 cents or so (46 cents tax, 10% or 30 cent retail margin). This leaves $2.25 for the greedy oil companies. It turns out large oil companies like Exxon make about 6% of revenues in the bad times, and 10% in the good times, like now. So, this leaves a profit of 14-22 cents per gallon. The "people" are saved! Gas prices can come down by a whole 15-20 cents. Of course, in return for saving a buck or two on fill-ups, we've nuked the whole incentive system for investment and finding new oil and improving efficiency. Gas prices over time will rise much higher than they are now, and lines will start reappearing at gas stations, but that probably won't show up until after the next election, so why should anyone in Congress care?