October 31, 2005
Democrats Raise Energy Prices, Blame GOPThis is the definition of chutzpah. The price of any commodity, such as energy, is determined by supply and demand. By restricting increases in the supply of energy through regulation and litigation, Democrats have ensured that energy supplies cannot increase to keep pace with increased demand. Therefore, prices rise to bring the market to equilibrium. This is why energy prices have risen dramatically, but Democrats are blaming Republicans for it. This despite the fact that Republicans want to expand our energy supplies while Democrats do not. Like I said, chutzpah.
Democrats, as usual, blame capitalism. Economic laws (the "invisible hand") will dictate the private sector's activity, not politicians. The laws of economics are as immutable as the laws of physics, and no amount of politics can change that. So when Democrats make it impossibly costly to build additional refining capacity or drill or mine for new energy sources, prices will rise. But Democrats scream "gouging!" As we've noted before, there's no such thing as price gouging. If prices did not rise, then we'd have energy shortages (this is why shortages - long waits - exist in nationalized health care systems). Unfortunately, some Republicans are falling for the gouging myth.
Amid record-high earnings from oil companies, Senate Majority Leader Bill Frist Thursday ordered a Senate hearing with testimony from major oil company executives on why energy prices are high.Frist would do well to learn some economics to know that in a free market system, unless there is collusion (already illegal under anti-trust law), there can be no gouging. Besides, the government is the biggest energy profiteer of them all.
Due in part to substantial hikes in the federal gasoline excise tax in 1983, 1990, and 1993, annual tax revenues have continued to grow. Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.
Posted by Jonathan R. on October 31, 2005 08:45 AM
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In this case, I am not sure I agree with the statement that there is no price gouging, regarding the rise in gasoline and fuel oil prices.
When one oil company declares a profit of several BILLION dollars MORE than expected, in ONE QUARTER, I wonder how this could have heppened without some price gouging. Now, if prices had remained stable and quantities of oil sold had gone up, I would not have questions. But if the only differences are the higher prices at the pump and, coincidentally, the higher profits, it looks pretty fishy.
Then another oil company declares a profit gain in the 90th percentile, for the same period, and the alarms do start going off.
How is is possible to increase PROFITS so dramatically in such a short period, without some form of price gouging? If costs to the suppliers had gone up proportionally to the cost at the pump, the PROFITS would not have soared so dramatically. Revenue is not the same as profit. No, the only way for the profits to go up so much is for prices, but not operating costs, to soar.
And that makes me very suspicious.
Posted by: Almiranta ![[TypeKey Profile Page]](http://www.gopbloggers.org/nav-commenters.gif)
at October 31, 2005 11:35 AM
If one oil company was over-charging, consumers would switch to lower-priced competitors. This is why there's no such thing as gouging. Only collusion (which is already illegal) can artificially inflate prices.
Posted by: Jonathan R at October 31, 2005 12:10 PM
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