House votes for energy shortages
Rep. Bart Stupak, aka "Stupe from da Yoop", has led his colleagues in the charge to save us from the eevul oil price-gougers...without quite defining what constitutes price-gouging. That's very convenient, as it means that enforcement can be reserved for very special Enemies of the People, while fear rules the rest.
Most of my campus readership (assuming I have a campus readership) was not yet born the last time this little stunt was tried. The year was 1973, the tyrant-du-jour was Richard Milhous Nixon, who on March 6 imposed price controls on oil and gas as OPEC began its production cuts, and we saw gas go from 30ยข or so to a whole dollar.
For example, when President Jimmy Carter announced in 1980 that his administration was beginning a phased decontrol of oil prices, leftist groups such as the Citizen/Labor Energy Coalition predicted that by 1990, crude oil prices would rise to nearly $600 a barrel, a prediction repeated by a straight-faced mainstream news media. (Before Iraq's invasion of Kuwait in the summer of 1990, oil prices stood at about $18 a barrel, so the "energy experts" were off by only $582.)All of this brings us back to Hawaii's pricing scheme, but one must keep something in mind. This was pretty much the same policy that the U.S. government followed back in the 1970s when it controlled prices at domestic wellheads, and at the pump. Any reader who was driving a car during that decade can remember the chaos that incurred, especially whenever there was turmoil overseas.
The government's logic went like this: if we keep the price at the wellhead low, then the savings will be passed on to consumers. However, by placing price controls on crude oil, the government managed to do two things. First, it created shortages of crude oil, as producers saw no incentive to take many risks to drill for more oil. (Yes, the government claimed it had "incentives" built into its policies, but these were the usual byzantine sets of bureaucratic incentives that had no basis in economic reality.) Second, it drove producers to purchase the more available crude oil that was made available from the Middle East. For all of the talk of "dependence" upon "foreign oil," government policies were the driving force in encouraging oil companies to look overseas for supplies of crude.
Policies guiding the pump price were just as bad. Using the logic of "Classical" economics, the government figured that if it took about a month for crude oil after it was pumped from the ground actually to find its way into a vehicle, then pump prices could not increase until a month or so after crude prices went up. Thus, consumers, anticipating price increases, went on "buy now" binges, which quickly used up existing supplies, causing gas lines and the infamous "out of gas" signs that littered gas stations.
Now, if one gas station charges too much, I go elsewhere. If everyone overcharges, well, I have less money in my pocket. What happens if there's a gas shortage? I can't get to work, I lose my job, and I have NO money. Clearly, if price gouging means I can get gas I desperately need, it's a good thing.
And the penalties on this thing are ridiculous. $2 million and 10 years for some gas station owner somewhere? Mao would never have treated an Enemy of the People so inefficiently. Might as well just shoot them and charge the family for the bullet.
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