Townhall.com ^ | May 29, 2013 | John Stossel
Plan to drive more this summer? Annoyed by the price of gas? Complaining that
oil companies rip you off?
I say, shut up. Even if gas costs $4 per gallon, we should thank Big Oil.
Think what they have to do to bring us gas.
Oil must be sucked out of the ground, sometimes from war zones or deep
beneath oceans. The drills now bend and dig sideways through as much as 7 miles
of earth. What they discover must be pumped through billion-dollar pipelines and
often put in monstrously expensive tankers to ship across the ocean.
Then it's refined into several types of gasoline, transported in trucks that
cost hundreds of thousands of dollars. Finally, your local gas station must
spend a fortune on safety devices to make sure we don't blow ourselves up while
filling the tank.
And it still costs less per ounce than the bottled water sold at gas
stations. If government sold gas, it would cost $40 per gallon. And there would
be shortages!
Another myth: Big Oil makes "excess" profit. Nonsense. The oil business is
fiercely competitive. If one company charges a penny too much, other companies
steal its business. Apple's profit margin is about 24 percent. McDonald's makes
20 percent. Oil companies make half that.
Per gallon, ExxonMobil makes about 7 cents. Governments, by contrast, grab
about 27 cents per gallon. That's the average gas tax. If anyone takes too much,
it's government.
President Obama says, "Gas costs too much." So he announced: "We've put in
place the toughest fuel economy standards in history. Over the life of a new
car, the average family will save more than $8,000 at the pump."
Sounds good. But the magic of fuel economy standards is another myth.
Susan Dudley, who runs the Regulatory Studies Center at George Washington
University, points out that many car buyers care more about safety, style,
power, etc. than mileage.
"The problem with the government's rule is that they ignore all those other
preferences ... assuming that the only thing we value is fuel economy."
Fuel economy sounds appealing when it's presented as something created at no
cost. But car dealers say it will make cars cost $3,000 more.
Also, as James Taylor, an energy expert at the Heartland Institute, pointed
out to me, fuel-economy regulations kill.
"In order to make cars more fuel-efficient, auto manufacturers make them
smaller -- using lighter materials, they're less crash-worthy ... We're seeing
thousands of people dying on the roads that shouldn't be."
You'd think automakers would strongly oppose these regulations -- but if so,
why, when President Obama unveiled the regulations, did the heads of 13 car
companies shake Obama's hand and smile?
"Even if it is a $60 billion cost to them," says Dudley, "if everyone has to
do it, they can pass it on to consumers."
In other words, normally companies compete to do things more efficiently than
rivals, in order to charge lower prices and get the lion's share of customers.
But there's no need to worry about jacking up your prices when your rivals must
do so, too. Regulation makes companies lazier, not more efficient.
Republicans at least talk about deregulation. But the "regulation-killing
Republican" is another myth. Despite being labeled a deregulator, George W. Bush
hired 90,000 new regulators. Dudley, who was their overseer, now says, "The
pressure to regulate is intense."
Almost no one seems to speak up for a true free market in energy, with
competition, innovation and unfettered consumer choice. People say regulation is
needed to counter industry "greed."
But if anyone's greedy here, it's government -- and unlike oil companies,
government doesn't have to work hard and compete to give you good service at the
lowest possible price. Government just sits there, telling companies to charge
less, telling car companies to make smaller and more dangerous cars, mandating
and subsidizing alternative fuels like ethanol -- and then telling us that we
benefit from the politicians' efforts.
The truth: We rarely benefit.
DIOGENES invites you to pull up a chair on this fine day and read posts from around the world. The writing may lean to the right...but that's the way Diogenes wants it! You may leave your opinion, but Diogenes rarely changes his! WELCOME!
Wednesday, May 29, 2013
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