Hawaii Puts Cap On Gas Prices

[scaeagles]

Price controls are always a bad idea, IMHO.

Thomas Sowell is perhaps my favorite syndicated columnist. He's a Stanford economist and a senior fellow at the Hoover Institute. Here's a couple of recent columns regarding oil, gas, and price controls -

http://www.townhall.com/columnists/t...20050823.shtml

An excerpt:

Why, then, are oil prices so high?

There is no esoteric reason. It is plain old supply and demand. With the economies of huge nations like China and India developing more rapidly, now that they have freed their markets from many stifling government controls, more oil is being demanded in the world market and there are few new sources of supply.


http://www.townhall.com/columnists/t...20050824.shtml

An exerpt:

Prices are what pay for costs. The government can impose price controls on gasoline or petroleum tomorrow but that will not have the slightest effect on the cost of oil exploration or the cost of extracting and processing the oil that is found.

When the costs are no longer being fully covered by prices, production is likely to be cut back, whether it is the production of oil or anything else. This is not speculation. This is what has been happening for literally thousands of years, going back to price controls in ancient Rome and Babylon.

Yet price controls have always been popular politically, despite being counterproductive economically. After all, how many votes do economists have and how many voters know economics?

Some people love to believe that prices should be kept down to a "reasonable" level, something that everyone can "afford." Yet the notion of "reasonable" prices is itself unreasonable. The costs of producing oil don't depend on what we can afford or consider "reasonable." Nor does the cost of anything else.