Gas Price Gouging

Last week, I linked to a story in the Des Moines Register, saying that Iowa would be able to avoid $3 per gallon gasoline if the oil distribution system could be restored fairly quickly. Apparently, fairly quickly meant "six hours or less". Seven hours after I wrote that, the first station I passed on the way to work was selling regular gas at $2.999 per gallon. By the end of the day, every station I saw was selling at the same price. And so it has remained here for the last week. Smaller towns in southern Iowa have prices that are 10 to 15 cents cheaper.

The sudden rise in gas prices is bringing on accusations of price gouging all around the country. Practically every state has started an investigation of excessively high prices at gas stations within the state. A search on the term "price gouging" at Lycos.com shows news reports of investigations in Tennessee, Washington, South Dakota, and Wisconsin all filed on the internet in the last 60 minutes. I have also read of state Governments in Missouri, Vermont, New Jersey, and California who are all looking at the problem or asking for Federal investigation.

Congress held hearings today on the issue but nothing seems to have come out of them. Their main complaint was that the Government does not have the ability to investigate or prevent such problems (here I thought it was Congress who passes all the laws). Ron's own Republican Senator Gordon Smith is quoted as saying, "The American people are being victimized more than any free market would warrant." Senator Byron Dorgan (D-ND) will introduce legislation to implement a windfall-profits tax on big oil companies but is not optimistic it will ever pass. (Nor am I).

I understand Senator Smith's concerns (both stated and unstated), but I don't understand how he defines what "excessive victimization" really is, especially in these times when Government is so deferential to big business concerns. My understanding of the free market is that people charge for a product or service what the market will bear. If people become too poor to afford something, they do without it, no matter how badly it affects their lives. The example that comes immediately to mind is legal services - if you are innocent of an accusation and have a great deal of money, you can afford an excellent lawyer, who is more likely to help you maintain your freedom. However, if you are completely innocent and have little money, then you may not be able to find someone competent enough to help you maintain your freedom. Your ability to stay free depends more then on the amount of money you have rather than on your innocence. Similarly, your ability to get gas and electricity may depend on how much money you have, not at all on how much you need it for your own survival.

At some point, Congress and the President will have to decide how we intend to apportion energy in this country, whether it will be a national right for everyone or will go exclusively to the highest bidders. Chances are that we will have more situations just like this one in the next few years to consider how the Government should resolve this issue.

One final note tonight - George Bush has announced that he will provide up to $40 billion for disaster relief. Much has been reported in the last week how the Federal Government cut around $100 million from the budget last year that could have strengthened the levee system in New Orleans. While not all of the $40 billion will go to repair damage caused by the levee breaks, I believe it will be much more than $100 million. I hope that somebody eventually figures out exactly how much this total is, then throws it in the faces of the Bush administration. We need to start demonstrating how their ideological hatred of government spending just costs us all so much more money in the long run.