Wednesday, September 28, 2005

gas prices, a lack of understanding, and stupid ideas.

This letter is from a staunch Conservative Party of Canada supporter in Essex, printed in today's Windsor Star:

A truly 'free market' would control prices

Does anybody really believe that all the gas companies incur the same costs related to the production and delivery of gas?

Then why the same price across the board? As a result of the gas-gouging, many people are calling for the capping of prices. Haven't we been down that road with Pierre Trudeau's wheat board and the government tinkering of hydro?

If you need be reminded what it brings, look at your "debt retirement" portion of your electricity bill. What we need are new ideas.

It's not going to come from the bought-and-paid-for empty suits in politics. The free market - with responsible government regulations - is the best solution to solve gas price-gouging.

The problem is that the gas companies have a monopoly, and that's not a free market. It's time to break up the monopoly and require that no two companies can have the same price in a designated area.

This would ensure competition instead of the price-fixing that is going on as we speak.

It would also be beneficial to consumers if gas companies could only change their prices a fixed number of times per month.

It's also well to note PM Paul Martin, months before the hurricane, stated that there is nothing he could do about rising gas prices. Once the hurricane hit, he stated that he's instructed Canadian oil companies to step up production to offset what was lost and to stabilize the prices.

Whether you're Liberal or Conservative, we're all caught in a game that wreaks havoc on our wallets. And our politicians are asleep at the wheel - just like the coming garbage crisis with Michigan.

The italics are mine.

Letters like this tend to get me agitated and leave me suggesting that we ship people to Cuba. (North Korea would also work.)

You don't know what a free market is.
A free market is a market that is free, lady. That means no restrictions*, not "only restrictions that a reasonable (read: Conservative) government would impose." You can't do a more complicated version of the same thing that Pierre Trudeau did and say that our way is better because we're from a different party.

A free market for gas doesn't make everything cheap for you. That's not what free markets do - that's what socialists try (and fail, as she points out) to do. What a free market does do is properly allocate resources to those who value them the most.

I suppose gas companies have a monopoly on gas (in the same way that, say, shoe companies have a monopoly on shoes), but what is this crap about the presence of monopolies proving that it's not a free market? Tabasco has a monopoly on Tabasco sauce. If my drug company invents and patents a new drug, we've got a monopoly on it. There's nothing wrong with naturally occurring monopolies. Also, learn this word, people:


A market condition in which sellers are so few that the actions of any one of them will materially affect price and have a measurable impact on competitors.

That's what's going on with gas producers. It also happens in a free market. So even if there was a problem with a monopoly in a free market, you wouldn't have to worry about it as far as gas goes. (If you're looking for something to compare it to, look at the CAW and the high wages they've set for auto workers, which drives up the price of cars. Should the government intervene there, too?)

Prices at the Pump
As for actual prices at the pump, which the writer seems to have the biggest problem with, you could hardly argue, with all the privately owned corner stores selling gas, that a monopoly exists.

"But why are gas prices the same across the board?" the author demands frantically.

Consider this situation: If I have a gas station, and you have a gas station, and I make my gas price a lot different than yours (let's say I make it much higher), then everyone is going to go to your gas station. You're going to have to raise your price to be more or less the same as mine, or you're going to have to run out of gas when everyone goes to your station instead and then proceed to lose a crapload of money while everyone passes your station to fill up at mine, where gas is still available.

Gas prices more or less the same in any given area because supply, demand, and the free market are at work.

It's a pet peeve
I worked in a gas station until recently, and I am so sick of everyone bitching about gas prices after driving up and filling their massive gas-guzzling SUV at 99.9 cents/L, paying $2 for a 1L bottle of water without complaint, then proceeding to demand, in their infinite wisdom, that the government must reduce how much they spend when they fill up.

We are still paying less than half of what they're paying in England for gas, so quit yer bitchin'.

If you want to pay less for gas, ride your damn bike. Drive a smaller car. Drive stick. We don't need people who don't understand what's going on deciding how to handle problems that don't exist.


(To clear things up: Yes, I wish gas was cheaper. I also wish the iPod Nano was cheaper. Those things are so cool.)

*I suppose you could argue that a free market has some minor restrictions, but the ones she's suggesting are hardly minor, so I stand by what I said, dammit.


Andrew said...

The Ontario (PC) government did purchase Sunoco back in the 80s! Maybe he has fond memories of that era.

Or he's listened to a few Joe Tascona speeches!

BBS said...

I hear the W-T EDA is giving away a Nano for the person that sells the most turkeys! LOL (or an appointment - whichever is cheaper)

mostlyfree said...

Oh god. I don't even want to know what the meetings to approve that would be like.

MPS: So what is this thing? I don't understand.

Merv: How much is it going to cost? How do I account for it? Will it be paid before December 21?

MPS: I think that offering rewards is too much like coercing members to work for you. We shouldn't be paying people.

CPC: Are we sure Nick isn't making money off this Nano thing?

Mike Rohrer: I live in this riding and I control the appointments!

Me: *hitting head off wall*