Awash In Moronic Economic Policies Crafted by the Overeducated

It seems we, as a nation, are awash in moronic economic theories put into practice by overly “educated” politicians who don’t even know how to change a flat tire. The best knowledge is weaned from experience shaped by the practical world and not the dope-smoking nonsense of the ivory tower.

Various politicians have their little sissy panties in a wad over high gas prices. They’re screaming that oil companies are gouging the public. “We need to regulate gas prices!” Remember the world of high gas prices and shortages before President Reagan deregulated the industry in 1981? I assume our elite colleges don’t teach historical facts that illustrate the wonders of the free market.

I’ve owned gas stations, and there is no more competitive industry in the world than the retail gas business. If I dropped my prices at the pump to outperform my competitors, they would immediately match my price. In one rural area, retailers 20 miles away would match my price. At any one time, the oil and gas business has 270 billion gallons of oil and gas in underground storage or floating on the sea. If there is even a hint prices will soon rise, retail pricing will rise because all those 270 billion gallons must be replaced. Wholesalers and retailers make more money when prices rise because the margin on the inventory they already have increases, and when prices fall, their margins decrease, sometimes to where they lose money. All retailers want to keep their prices high when wholesale prices fall, and for a short while they do, but then they fall because retailers beat each other up vying for market share. Instead of bitching about high gas prices, politicians should study the oil business and its remarkable efficiencies and learn to quit interfering in the free market.

Oil is pumped out of the ground 7,000 miles away. It is moved by barge to Louisiana, where it is refined into gasoline. Additives are added. Then dozens of various grades of gasoline flow 1,000 miles through a pipeline to Virginia. The Feds and the state of Virginia tack on 60 cents in taxes to each gallon (in practice, this increases the per-gallon cost by more than 60 cents). A wholesaler picks up the gas and delivers it to the retailer, sometimes driving 60 miles to do so. By the time this 7,000-mile journey ends in Richmond, a gallon of gas at the pump often costs me less than a liter of bottled water, and that liter of Evian can’t make a 4,000 lb. vehicle loaded with 4 passengers go 40 miles down the road at 70 miles an hour. A retailer might make 3 or 4 cents per gallon, but the government always makes 60 cents per gallon, even when the retailer loses money. The last thing this remarkably efficient system needs is government price controls, a recipe for shortages and stagnant innovation.