The government can do very little about gas prices. If you don’t believe me, please believe this pro-capitalism financial journalist’s opinion:
Related: What Democrats don’t get about gas prices by Rick Newman
Please note that when he says “the left” he means Democrats, who are not the left.
Here are a few facts:
- Oil companies don’t really control the price of oil. Oil is a publicly-traded commodity, so “the market” controls the price. Realistically, they can only choose to sell or not. That isn’t really what you’d normally think of as “control”.
- The market is all about what investors believe to be true — not the facts — and the investors are out of touch with reality, their heads are completely up their own asses.
- The oil market and gasoline market are separate entities, so the price of one doesn’t necessarily have a rational relationship to the price of the other. Even if they were directly related to each other, making gasoline out of oil takes time so we shouldn’t expect a drop in the price of oil to instantly drop the price of gasoline.
- Only about 1/4 of US-produced oil comes from government-controlled land.
- There is no “US oil” because oil is extracted by multinational companies that sell it on the global market. Just because oil is extracted in the US doesn’t mean it stays here; just because oil is extracted somewhere else doesn’t mean it can’t be sold in the US.
- The US military is the largest institutional consumer of oil in the world (probably mostly in the form of diesel and jet fuel). Shut it down and watch the price of oil drop dramatically.
- Our irrational addiction to fossil fuels is going to kill us all.
Yes, the Democrats are desperate to get the price of gasoline down before the mid-term elections, and yes, the voters (who are incredibly uninformed and irrational) will definitely punish them for high gasoline prices. Yet, there’s really very little they can do about it… except to create the impression that they’re doing everything they can.
Per usual, it is pretty hard to tell whether the Democrats know that burning fossil fuels is bad and that they have very little control over the price of gasoline (and are just playing six-dimensional chess for the sole purpose of maintaining power), or whether they are, in fact, idiots. I suppose it could be both.
Edit: A club member reminded me that I must always state the obvious, so here it is: If the United States wanted to stabilize the oil and gasoline supply for the sake of the American people, it could simply nationalize its oil. Once nationalized, oil and gasoline prices could be whatever we want them to be, but more importantly, those resources could more easily be phased out for other options that are more economical, strategic and sustainable. Neither political party is interested in pursuing that option; when I say that there’s nothing the Democrats can do, I mean within the confines of this two-party system. If we think outside that box, nationalizing oil would be the obvious solution.