Saturday, May 06, 2006

Why are Gasoline Prices so high?

I can not believe all of the navel gazing that is going on in this country as to why gas prices are so high. The Congress is going to investigate, the Bush is reaching for answers. They all know why, but they are not going to tell you. The reason is simple high school economics. No it is not the tired old canard about supply and demand.
The real reason is that in the last decade the big oil companies have been merging and buying out their competitors. Less companies refining gasoline combined with less companies retailing gas means that the companies can charge more for fuel than they would with more competition. They are free to raise pump prices until people actually use less fuel. I believe the term Economists use is Monopolistic Competition. For a century, our government, by acts of Congress, has had the job of keeping markets free of monopolies. The Bush and Clinton administrations have rubber stamped these oil company mergers. The people that were supposed to be enforcing the laws against monopolies get huge campaign contributions from big oil. Now with the Bush Cheney administration, bought and paid for by big oil, it is open season on the American consumer.
With the huge profits earned by raising gas prices, big oil will have even more cash to buy more influence in Washington. So next time you hear someone in government talking about high gas prices and blaming Katrina, China, the Middle East ect., remember that the pain of high gas prices was created by big oil and approved by their bought and paid for "public servants". And you thought that they worked for you , the American people.

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