Oil & The Free Market

"Hark! Hark! The dogs do bark, The beggars are coming to town." That was the beginning of a Mother Goose rhyme during 16th century England. Methinks it applies today. Then, the English homeless were begging for food. Today, the beggars want the guvmint to "do something" about the price of gasoline. They say that the free market "isn't working" in the case of oil and fuel. Hogwash! The free market is working perfectly! The price of oil is basically a matter of supply and demand. When demand goes up and/or supply goes down, prices rise. That tends to cut down on consumption (demand) which tends to lower price. That's the free market and it is working perfectly. The problem is, we the people aren't happy with the resulting price right now, so we want the guvmint to interfere with the free market. So far, the guvmint proposes or is already practicing the following interferences, among others: 1) The guvmint subsidizes every gallon of ethanol. Ethanol will not need subsidies once it can be produced and sold for less than gasoline. Guvmint subsidies falsely tend to make ethanol appear cheaper, and this reduces the incentive for manufacturers to produce ethanol more cheaply. Ethanol subsidies also reduce the incentives to work like hell producing other alternative fuels more cheaply. 2) The guvmint brags about investigating oil company profits, implying that profits are bad and perhaps fraudulent. Let them investigate all they wish, but in the meantime guvmint should favorably publicize the profits being made in the oil business. This would encourage others to rush into the market, thus increasing supply greatly and, voila, reducing prices. 3) Subsidizing, via tax breaks, hybrid cars. For crying out loud, don't they know that people all over the world are working night and day to make hybrids and other cars more efficient? The market is already working feverishly on this. Why should we subsidize hybrid cars and thus reduce the incentive for the free market to really bring down the cost? Guvmint also says it wants us to use less fuel (those of us who remember the early 1970s have heard this before). Question: If the guvmint wants us to use less oil-based fuels, why would they try to make the damned stuff cheaper by subsidizing it? The high prices already have us cutting consumption. Why indeed? Because the beggars do come to town, not for food for their families, but for cheap gas for their expensive SUVs. (Ask in private and I will tell you about the medical doctor ranting that guvmint needs to cut fuel prices for his big vehicle.) We'd love to post your comments. Just click on the "Comment" box at the top.