There’s been a lot of talk recently about the rising gas prices and many people look to the local and federal governments to help as many people believe the oil companies are engaging in price gouging.
It is one thing to be unhappy with the current prices of gas, but to seek legal action to keep gas cheap is wrong. What right does anyone or any government have to be involved in the pricing structure of gas? They didn’t drill it, refine it and distribute it?
I know my view is most likely a minority view… but for me it’s a matter of principle. Growing up I was taught to respect others and to be honest. Honesty and respect for others includes not stealing from others. By telling an individual or company what they can charge for a product or service is stealing. If someone goes into a store and tells the store clerk, selects a stereo they like for $200, pulls out a gun and tells the clerk, you will give this stereo to me for $100, isn’t that theft? We simply don’t have a right to cheap gas.
Besides, as always, any government intervention will just increase the cost as any tax or regulation of anything usually results in an increased cost to the end consumer in some form of taxes or is passed on by the business to the consumer. The goals of government regulation are rarely, if ever, achieved.
If government wanted to do something to help, they could stop increasing taxes on gas and decrease regulation… allow more refineries to open to increase supply. If there was ample supply of gas, prices would indeed go down… and most of all the government could stop giving out corporate welfare benefits to the oil companies and providing them protected markets… allow more competition.
Another point I will make is when you here about the supposed “obscene profits” being made by oil companies… the facts are being exaggerated. When compared to other companies, ExxonMobil‘s profits are not so hot for everything they put up with. I compared their stock performance over the last 5 years to many different companies and most companies actually perform better or much better and have far less debt than ExxonMobil. ExxonMobil’s stock performance is 40% over 5 years. A few comparisons are below…
Nathan’s Famous Hot Dogs:
Stock Performance: 300% over 5 years.
Stock Performance: 40% over 5 years.
Green Mountain Coffee Roasters:
Stock Performance: 90% over 5 years
The performance of Pepsico is similar to ExxonMobil and Nathan’s blows them away in stock performance. Their profit margins are also better, and since I don’t see any protests about the pricing of Pepsi’s bottle water, soda and snacks or nathan’s hotdogs, this suggests that consumers value these more than gasoline. Surely gasoline a miracle substance that allows us to travel anywhere, get to work, see friends and family is more valuable than sugar, salt, water and wheat?
Full Disclosure: Jeremy Ryan is a shareholder in both Pepsico and Nathan’s Famous and operates PepsiCollectables.com. Jeremy does not plan to invest in ExxonMobil.