Tuesday, May 02, 2006

Gasoline Prices

Nothing is more permanent than a temporary tax.

Part of what drives up gasoline prices are government taxes. 18.4 cents of every gallon in the U.S. goes directly to the government. Who is being charged these taxes? Average citizens or the gasoline and oil companies? Do you think the gasoline and oil companies are paying any of those taxes? You should know better.

When the tax first began in the early 1900s, it was a "temporary" tax of one cent a gallon. But the tax stayed and increased every decade. The gas tax is not the only temporary tax that has remained and increased exponentially over time...

There is a rule that Libertarians live by and which economics and history shows to be true: the more government is involved, the worse things get. The best thing would be to stop all gas taxes. This would dramatically reduce the price people pay at the pump, put more money into the pockets of the poor, place more money into the economy, enable people to afford better or more services, which makes more jobs, and decrease the load and burden on the government which will then tax less (if forced) since it is not being pressured to do something to correct an error which is being corrected automatically in a free and open market.

The charge of "price gouging" is a myth.

Companies always charge as much money as the market can bear in order to make a profit. The market is determined by supply and demand. The less supply and more demand, the higher the price. If you want to affect a decline in price, you have to either: 1. increase supply or 2. decrease demand.

You are not powerless. You vote every time you spend money and how you spend your money. When you buy large quantities of gasoline when the price is high, you are voting that the high price in the market is acceptable and agreeable. If you decrease your demand and buy less gas, you tell the companies it is unacceptable and are voting for a decrease. The more Americans do this, the bigger the vote, the less demand, the more the prices will drop and the more gas and oil companies will realize the extend to which they can charge for their products.

I am biking to work instead of driving every other day from now on to vote against these high prices. From now on, I can blame you for high prices, but you cannot blame me or the companies--unless you join me.


Anonymous Beefman Steve said...

You bring up a good point about gasoline tax. Putting that money back into the economy would be a huge boost nationwide. But 18 cents per gallon isn't enough in my book. The price has gone up at least 75 cents per gallon just in the last month or so. And the end isn't in sight.
I disagree that 'price gouging' is a myth. I am convinced that it is real and affects people all across the nation. Price gouging only appears under the contraints of law, mostly the idea that our culture strongly pushes the need for a product w/o substitutes and then charges more than what would be considered 'reasonable'. I'll explain 'reasonable' in a minute.
The government controls monopolistic markets such as electricity and water. Gasoline on the other hand is imported, therefore the government does not have the same level of control on pricing.
All that to say: Price gouging apears in this sort of culturally forced monopolistic industry when the few begin to take from the many. The government looks the other way as corporate america begins to rob the masses. Our middle class is being gutted out while the rich get richer and the poor get poorer. This is not reasonable.
On another note, the government is forcing more corn based ethanol in the gas, which is more environmentally friendly. This type of ethanol is more expensive.
As one can see, there are many factors driving the price of gas. There will have to be many solutions to bring the price down. That is of course, assuming we contiue using the oil as our source of fuel. But that is another can of worms.

1:13 PM  
Blogger slaveofone said...

I'm confused, you said there is price gouging in gasoline, but that gasoline is not a monopolistic market and price gouging happens in a monopolistic industry/market. According to your own reasoning then there would be no price gouging in gasoline...

Yes, there are many factors driving the price of gas. Government tax and environmental laws definitely effect this. And dropping the tax will not be "enough".

But if people voted with their money by substantially decreasing the amount of gas they buy, that would be more enough, because corporations only price as much as people are willing to pay for a product. If people stop paying for gas at $3.25 a gallon, the companies won't charge that price because they'll lose money.

3:05 PM  
Anonymous Beefman Steve said...

Sorry for the confusion. Maybe I did not state my thoughts so that others could understand.
I did say that price gouging occurs in gasoline. I also said that gasoline is a monopolistic market. If you are refering to the example w/ electricity and water. The point is that gasoline is like electricity and water, a monopoly. The difference however, is the level of price control. Hense, our situation.
Reading on the in paragraph I conclude the issue stating that 'price gouging appears in this sort of culturally forced monopolistic industry...' refering to gasoline.
I agree that buying less gas is my way of voting, so maybe I need to find a job where I don't have to drive 30 miles one way to work...

3:37 PM  

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