Gas Prices

Just a quick blog entry today...

Watching a news show that did a segment on gas prices sparked my interest in a new debate that is anti-oil companies and their effect on gas prices.

No industry is probably attacked in our "capitalistic" economy more than oil companies.  There is a new argument used to blame them for the high gas prices that has recently been in the news due to what is happening in California.

The new argument is that these companies are exporting too much gasoline to other countries that are buying it and thus lowering the local supply of gasoline here in America, and driving prices higher here in America.  Now that impact on the actual price here in America is very minimum anyways but lets go with this argument and entertain the thought.

What are we to do?  Tell "big oil" to not sell their gasoline to the best buyer willing to offer the best price.  Are we to expect oil companies to do the "patriotic" thing and turn down foreign buyers in order to supply more gasoline here in America?  The reality is that global demand is outpacing the global supply and this drives prices up.  If our oil companies were to do normal business they would sell this gasoline to the best buyer.  I would argue that if they chose to keep that gasoline here, the supply in other countries would go down, thus driving up global OIL prices and thus it would end up costing more to purchase oil and possibly offset the lowering price of gasoline if oil companies were to keep that gas here.

The other argument is that the government should get involved and force oil companies to keep that here or to somehow maybe restrict or tax those exports in a way that would punish oil companies for doing that.  But do you really expect other countries to not react?  If you believe that our wonderful government can restrict our products from going abroad and do this without other countries responded by restricting goods coming here then you are drinking the cool-aid.  This would of course hurt our economy in other areas where other countries pass restrictions against America.

I have blogged on a more long term solution in the past.  But this is a new argument that is designed to demagogue oil companies once again.  I just wanted to let you know... its not nearly that simple.  Read those past blogs to understand more about how to get gas prices down.