Right To Be Concerned With Oil Prices

As I read this blog on the high prices of oil, I must say I wasn't overly impressed with the article linked within it. The prevailing rate of gasoline is astonishing! I am in favor of some government intervention in regard to the price of oil we pay. I am not crying any tears for oil companies. They are not going to hurt financially, they just might be required by law to be a little less greedy, but they will still be wealthy! My demand for oil hasn't changed, but my ability to pay for it has. Whether it's turning on the heat, or having the ability to pay for a drive to St. George, my purchasing ability has gone way down because gas is currently $2.50 a gallon! What can I say, I'm out for the common man on this one, I hope that the government steps up and helps out its citizens. And for any that are worried about oil companies' profit ability, there will always be mounds of politicians that will continue to support them because of the incentives they offer through their lobbying and private jets, etc.


Seth said...

I disagree with Blake. Like the article liked in the blog, I don’t think big oil is price gouging. Oil is a commodity in a competitive market, without collusion prices are determined by the buyers not the sellers. I don’t think the oil companies have market power to set prices. I have been wrong before, I thought the energy crisis in California about five years ago was the result of market forces, so I’m not opposed to government inquiries into oil companies’ profits.
The idea that government should “step up and help out its citizens” by reining in the greed of big oil makes me uncomfortable. I think such intervention would set prices below the market equilibrium and cause a shortage just like it did in the 70’s. $2.50 a gallon is painful but the simplest explanation is not greedy oil companies. I’d have to see evidence of price manipulation to blame them.

Jake said...

While I think that current oil prices may be higher than they should be according to market powers, there are many other options in addition to creating a price ceiling. The government could tax large SUVs or open of our reserves. I don't know what the best option is, but there are many other options.

Dr. Tufte said...

I'm not sure why people - Blake included - are always so hot to restrict the oil industry. This is not an industry that has a good track record of long-term profitability. What is it with picking on companies when they are doing well and ignoring them when they are doing badly?

I agree with Seth - I was (partially) wrong about California, and I too am willing to countenance investigations. However, I will also add that we had a crisis in California that year, and not in the other 49 states, because California's government designed a faulty system. I'm not sure that the energy companies are guilty of anything if their managers spot the suckers.