August 25, 2005
Now there's a good idea
The governor of Hawaii has imposed a price cap on gasoline. The wholesale price has been capped at around $2.16, which would suggest a retail price of $2.86, provided retail markup and taxes remain the same.
This is one of the worst ideas ever. Price caps do nothing to affect the actual cost of a good. All this is going to do is create gas shortages. So gas won't ever cost more than $2.86 retail, but there won't be any, because 1) retailers won't buy gas for more than they're allowed to sell it, and 2) people that do buy gas will sell it on the black market for what it's really worth, plus another markup to cover the risk they run in violating the cap laws. The sticker price will be $2.86, but if you actually want to be able to fill your tank, I wouldn't be surprised if you had to spend $4.00 or more.
Yet another example of the imposition of aesthetics on economics.
It's really unfortunate that people don't understand that a free market system does not respond well to price caps. The purpose of prices is to allocate scarce resources. People just think only of "stage one" and don't think anything beyond that. It's sad that many people don't understand economics better.
Posted by: Nathan at August 25, 2005 10:25 AMUltimately, I think we need to find alternative fuel sources and have the ability to drill in more places while we still use petroleum. How would you feel about cutting taxes on gasoline in the meantime?
Posted by: RobU at August 25, 2005 10:12 PMwhat kind of nonsense is this? have you a rag wrapped around your empty noodle? why not offer no tax on alternative fuels as an incentive to produce/purchase same? you freepers are so disgusting... sincerely yours, north chatt. bubba.
Posted by: north chattanooga bubba at August 25, 2005 10:24 PMdude, what the hell are you talking about? we would be using more alternative resources if they weren't so damned difficult to extract -tax or no tax. right now we can't even get nitrogen w/o burning buttloads of coal and oil in the production process -plus there issues with making a delivery system to utilize it. it's too expensive at this conjecture.
Maybe we need fuel taxes to help fund in research for these things.
Posted by: jCave at August 26, 2005 9:41 AM