One of the key difficulties in government is attempting to reason about how to achieve goals in a reasonable way. Unfortunately, most politicians have little to no grasp of economics, and the rest of us suffer for it.
The current gas price contretemps is a wonderful example. The government has, over the years, taken steps to reduce domestic production (mostly to serve the state religion of environmentalism – see ANWR), block expansion of domestic refining capacity, increased the costs by changing formulation rules (again for environmental reasons), blocked increased production of alternatives (nuclear), and increased taxes on fuel consumption.
Add to the mix that a large chunk of the world’s current production comes from unstable countries run in an autocratic fashion ranging whose leaders range from kleptomaniac to lunatic, and now we’re panicked over gas prices? Of course, the first thought is to strangle future production via excess profits taxes, increased taxes at the pump, hearings, etc.,
For some perspective (HT: Powerline) here’s a classic definition from a Mr. Craig Harrison:
“Price Gouging. Price Gouging is defined to be any profit made by a company in an industry that is defined to be a Suspect Industry.Here’s a roundup of thoughts on the issue.
Suspect Industry. Any company that is engaged in any energy activity, or any company or industry that is designated by any elected official of the Democratic Party to be a Suspect Industry by any public statement. Under no circumstances will trial
lawyers, the health care industry, unions or the abortion industry be included within this category.”
The Wall Street Journal
Wm.F. Buckley Jr.
Walter Williams + Bonus Williams post on Prices
My original posts are here, here, and here.