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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Ditchdigger who wrote (69087)	7/3/2000 9:30:16 AM
From: Tomas	Read Replies (2) \| Respond to of 95453

No fueling: Conspiracy theory runs out of gas - Houston Business Journal, July 3 By Bill Schadewald For some inexplicable reason, American consumers have been conditioned to believe that the laws of supply and demand apply to every commodity except gasoline. The mere act of owning a car apparently entitles us to the inalienable rights of life, liberty and the pursuit of happiness at 65 miles per hour in an SUV. Price swings are stoically accepted in all sorts of products. Nobody asks questions when a fruit fly is spotted in Florida and the price of a pound of oranges suddenly jumps at the supermarket. A fire wipes out the Columbian coffee crop and there is nary a peep as the tab for a cup of java jumps. A freak storm flattens an Asian cane field and shoppers quietly absorb the increased cost of sugar in the checkout line. But any rise in the price of a gallon of gasoline sets off howls of protests and charges of conspiracy. Hardest hit by the recent price spike are the Midwestern states, where drivers are -- heavens to Betsy -- now paying $2-plus per gallon at the pumps. Their plight has moved the Federal Trade Commission to launch a full-scale investigation of the oil industry to determine whether there has been gouging, price-fixing or other such illegal shenanigans. The latest probe should come as no surprise to the petroleum sector, which has long served as a popular target for political posturing. The Beltway bureaucrats have always had a slightly skewed view of how the energy industry works. They believe it all began when some wildcat wahoos accidentally kicked over a pile of cow-flop and up from the ground came bubblin' crude -- oil that is. Voters were few in these faraway territories, so Congress promptly assumed the role of Don Barzini in "The Godfather" and ordained that "all of the families must be allowed to drink from the well." To this end, they spent subsequent generations creating complex pricing mechanisms and instituting onion-like layers of regulatory controls. But market forces have a way of foiling the best-laid plans of mice and Congressmen. The latest episode is a case in point. Prices aren't just excessively high at more than $2 this summer. They were also artificially low at less than $1 last summer. It's a wonder they aren't even higher in an industry that has had to cope with a continuing barrage of cost-sensitive pressures ranging from endless rounds of ever-increasing federal and state taxes to government-mandated fuel cleansing campaigns. Compared to other consumer goods, the price of gasoline has remained relatively stable over the years. Embargoes and global gluts instituted by foreign exporting countries have produced a few dramatic ups and downs, but the price hasn't strayed far above or fallen way below the $1 level during any extended period of time. Not so for a number of other commodities, even those produced primarily in the Midwest. The price of a pound of cheddar has more than quadrupled in price, but cheesehead dairy farmers in Wisconsin have yet to come under attack. A loaf of bread has tripled, but Kansas wheat growers aren't being charged with collusion. A can of corn has doubled, but no inquest has been held to investigate Iowa's agricultural practices. Instead of launching futile inquisitions, the FTC minions would be well advised to take a refresher course in Economics 101. OPEC countries have taken a short turn on the spigot, reducing supply. This, coupled with rising demand, has translated into a price increase. It's that simple. Eventually, their traditional thirst for amassing petrodollars and capacity for cheating on quotas will compel the exporting nations to reopen the taps. It's happened before and it will happen again -- and again. And each time the price will go down at the pump. The same can't be said for a pound of cheese, a loaf of bread and a can of corn. Bill Schadewald, Houston Business Journal editor, can be reached by e-mail at bschadewald@bizjournals.com. bizjournals.com