Politicians are talking of “price gouging” and oil. They say Americans are being charged too much for oil (as evidenced by the price for a gallon of gas hitting $2 in parts of the country).
What exactly is “price gouging?” No objective definition is ever given. From what I can tell, politicians who use this phrase mean to say that more than a “reasonable price” is being charged for gas and oil. “Reasonable” in this context is entirely subjective. Reasonable, to these Democratic and Republican politicians, simply means a higher price than they’re used to; a price higher than one with which they would feel more comfortable. To such ignorant politicians, the purpose of prices is to make people feel comfortable, not to simply reflect the relationship between supply of and demand for a particular product or service at a given point in time.
In reality, prices will ultimately be set by supply and demand. If the price of oil goes up, this must mean that there’s too little oil relative to the demand. Of course the looming war in Iraq is also a complicating factor, as is the continuing role of government intervention (including the threat of government intervention, such as price controls) in every arena of the economy. Still another factor is that we allow Western oil to be under the control of dictatorships — not only Saddam Hussein, but also Saudi Arabia. “Price gouging” is the least of the sins of these dictators.
The objective law of economics is still supply and demand. Politicians such as Senator Joseph Lieberman do not live in the world of objective reality. Instead, they demand to know if “price gouging” is going on and what is the Bush administration “going to do about it.” All this means is that certain politicians and their constituents feel uncomfortable. It doesn’t tell you anything, objectively, about what is going on economically, nor what the real underlying problems are.
If you want gas prices to be cheaper, you should do several things: (1) use less of it; (2) demand that politicians get their hands off the economy altogether, and stop threatening (or implying threats about) price controls on gasoline (as we had back in the 1970’s, creating monstrous shortages and gas station lines); (3) demand that the federal government lift environmentalist restrictions so that drilling can be done closer to the U.S., thereby freeing us of dependence on oil from irrational dictatorships like Iraq and Saudi Arabia; and (4) demand that our government stop walking on eggshells, drop the necessary bombs on our terrorist enemies and take over their oil fields (created by Western innovation and technology in the first place) until the people in those countries show they are prepared to have a rational democratic republic which doesn’t threaten the well-being of the free world.
We have every moral right to do so. Our failure to recognize this fact is reflected in ever-rising oil prices. Timidity in morality leads to a thinner pocketbook.
