Politicians may be frenzy about gas prices and may wish to create laws to control price gouging and blame the OPEC for the high gas prices. However Jerry Taylor, senior fellow at the Cato Institute, argues that American fuel consumption hasn't been affected by rising prices -- and won't be -- since gas remains inexpensive compared to historic highs.
"Maybe symbolic blather is the best we can hope for from Congress under the circumstances, but it would be nice if the federal code were something other than the product of a freshmen dorm-room bull session," says Taylor. "High pump prices are not reducing demand because they are not imposing anything like the economic pain politicians allege."
He also affirms that in 1972, defined as the "last year of energy innocence", prices averaged 36 cents per gallon. Add inflation and it comes to an equivalent of $2.77 in today's prices. Current prices might be high but not that far from the ones paid at the beginning of the year. He also affirms that "Politicians who think that the government should or, more importantly, can do something about gas prices are deluding themselves -- recent federal action is lurching toward price controls, which is the stupidest, most ineffective policy option out there."
He concludes that the war against "price gouging" might artificially lower prices but "that will benefit the few who manage to buy gas before it's all bought up. Right now supply-and-demand fairly determines the current -- and fair -- price of gasoline. It's a law of economics that has been proven time and time again".
Does that mean we can expect to pay even more at the gas-pump? Then maybe if we all used more efficient vehicles, demand would go down and prices would be cheaper?
[Source: Cato Institute]