How much of the recent petro price hike results from govt officials trying to "do something" about petro prices? Some will say that the Iraq war qualifies as the govt "doing something", which has backfired, and maybe so. Though does this mean that Nigeria just needs a Saddam Huissein? And what does this say of those who would prefer a despotic Iraq with a stable oil flow, to an Iraq in which self-rule and self-determination are possible? Surely the most stable petro prices will flow from free-market democracies, though not everyone is willing to pay the enormous "cost of freedom."
Anyway, consider the corn-oil addative congressional mandate, and its role in raising petro prices.
2006-04-25
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Petro companies make about 17% profit on each gallon that you purchase; your govt makes about 45%. Meanwhile, many industries make more that 17% profit, including banking/credit and pharmaceutical companies.
I am confident that the free market will solve this problem, and that humans will continue the progress in civilizaiton that began a few thousand years ago.
Oil company profits are too high when the US working class is in such dire staits, and is paying those profits.
On the other hand, however, higher gas prices should encourage conservation. It won't help us in a Michigan without viable mass transportation, but it would benefit everyone else in the long run.
Petro profits have remained constant at about 17%, which is less than for many other industries, such as pharmaceutical, banking, and credit. These profits help support the 401K programs of the US working class, and finance the exploration and upgrading of the infrastructure that maintains super reliable delivery of petro to the US working class.
Forcing a reduction of these profits would hyptothetically reduce the petro cost to US working folks by a maximum of only 17%, but realistically would reduce the incentive for oil companies to explore, and would cause investers to take their money elsewhere.
It's a funny thing, capitalism. Unlike socialism, it doesn't promise paradise. However, it does facilitate the best possible goods and services at the lowest possible price balanced by the highest possible profits, for a given set of circumstances.
If political leaders and voters followed my advise, we'd permit free citizens organized into "companies" to produce nuclear power plants, and explore for petro in all US lands.
I agree with you that these high prices (which I believe will be temporary) will cause an increase in people (even evil rightists like me) to become interested in what I call "smart" designs, for energy efficiency throughout their lives.
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