Sunday, July 22, 2007


I love warm weather. Here in Maryland that means an abundance of tan girls dressed in skinny tank tops and short skirts. And if my email's inbox is any indication, it also marks the arrival of stupid chain letters imploring us to boycott gas stations because the price of gas is starting to rise.

For the record, the message I got today reads: "DON'T PUMP GAS ON MAY 15TH!" and I've received it from no less than a half-dozen people, over half of whom I don't even know.

Ahhh... I love the smell of unbridled idiocy in the morning. Unfortunately, though, these people are hardly alone. In fact, it's virtually impossible to go to work or out to a bar on the weekend without hearing people complaining about rising gas prices.

As with any other good, fluctuations in gas prices indicate little more than simple supply and demand. As Thomas Sowell wrote in 2005, "With the economies of huge nations like China and India developing more rapidly, now that they have freed their markets from many stifling government controls, more oil is being demanded in the world market and there are few new sources of supply."

And according to Larry Kudlow, "Rising gas prices and home values represent the forces of good, not evil."

I have several good friends who are in the market for a new house, and the prevailing mindset among many is that it's just "too expensive" to build one. In Southern Maryland, it's not uncommon to have to spend $400,000 for a three bedroom, two bathroom house on half an acre of non-waterfront land. Certainly this is not cheap. But it would behoove us to realize that this is a good problem to have, considering some alternatives. Rising prices reflect growth and prosperity, not poverty. In my hometown of Olean, New York, low land values are indicative of a depressed economy and little to no economic growth. I know where I'd rather live.

But back to gas prices. Let's do a little comparative analysis to see if the oil barons really are just raping us at the pump.

A friend and I were at the Tiki Bar recently. While standing on the pier we overheard a guy complaining that he had to pay $2.49 a gallon to fill his tank (it's now around $2.89 and sure to continue rising). Funny thing is, he spent at least $3.00 on the Yuengling he had in his hand.

I couldn't help but realize that at $2.49 per gallon, the man spent less than 2 cents per ounce for the gas, given that one gallon equals 128 ounces. Interestingly, he never lamented the fact that he'd just dropped 25 cents per ounce for his can of beer.

How about wine? It's not abnormal for many couples to go out to dinner once a week. How many will order a $4.00 glass of wine? At about 5 ounces per glass, that's a whopping 80 cents an ounce!

Or perhaps a vodka tonic is more your style. A drink containing merely one ounce of Grey Goose vodka will run you at least five bucks in any restaurant or bar. That's right, that's five bucks an ounce.

And on and on we could go.

People are free to boycott gas stations if they choose, but it doesn't necessarily mean they understand the economic factors that drive prices. And these are most likely the same people who would empower the government to impose price controls if their little schemes to lower prices themselves don't work to their satisfaction.

That countries like China and India are turning more and more to capitalism is undeniably a good thing, both economically and politically. But if we expect a government to find a solution to a "problem" it's incapable of solving, we'll surely get what we wish for and be ever the worse off for it.

Government can and should do nothing -- unless of course that means lowering its own taxes that drive up gas prices, or combating the political hysteria preventing an increase in our own oil production, which merely limits supply and drives up prices in the first place.

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