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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: sammaster who wrote (64288)	5/13/2006 10:24:11 PM
From: ChanceIs	Respond to of 206325

The Real Gas Gougers >>>I know that we are talking natural gas whilst this editorial addresses Congress' silly manipulation of gasoline. However if they do this to gasoline, you have to figure NG is a short step away.<<< May 11, 2006; Page A16 Perhaps the explanation is an outbreak of mad cow disease on Capitol Hill. Last week the House of Representatives expressed its collective outrage over high gas prices by voting as a herd, 389-34, to make gasoline "price gouging" a federal felony. Really. This command and control legislation reads like the kind of law passed by the old Soviet Politburo. If an oil company is found guilty of charging a "grossly excessive" price for gasoline, it could face a $250 million fine and its executives face imprisonment. Even neighborhood service station owners could be sentenced to two years in jail and a $2 million fine for the high crime of charging too much at the pump. One small problem is that no one in Washington can seem to define what constitutes price gouging. Under the House legislation, the bureaucrats at the Federal Trade Commission would define a "grossly excessive" price and then, once prosecutors charge some politically vulnerable target, juries across the country would decide who's guilty and who's not. A Senate version, sponsored by Maria Cantwell of Washington, contains terms like "excessively unconscionable price increases" and "a gross disparity" between the normal price and the price during a shortage or an emergency. If all of this seems hopelessly vague, the heretofore sensible Joe Barton, head of the House Energy and Commerce Committee, explains that "we know price gouging when we see it. . . . We're here to put the gougers out of business . . . or behind bars." If this works at all like the malpractice tort system, with deep pocketed oil companies pitted against widows and orphans, look out. The fact that only 33 of 231 House Republicans voted against this devious idea marks a new low for the melting GOP majority. Yes, it's also depressing that only one Democrat voted against the bill as well, and Ohio's Dennis Kucinich did so because he didn't think the bill was punitive enough. As Jeff Flake of Arizona, one of the brave 33 no votes, tells us: "None of my colleagues actually believes this will reduce prices, and many realize it will ultimately make shortages worse." Yet this is what happens when petrified politicians allow mob rule to trump economic common sense. There's no actual evidence that oil companies or gas stations are in any way "gouging" consumers. Webster's Dictionary defines the term "gouge" as "to extort from or to swindle." But in the marketplace with prices set free of government intervention, the sales price is established through a transaction of a willing buyer and a willing seller. Service stations are in no way "extorting" or "swindling" motorists at the pump. In recent years, prices at the gas pump have risen less than has the global price of crude oil, which would seem to refute any price gouging claim. But even if service stations decided to charge $5 or more a gallon, how is any consumer being extorted or swindled? No one can compel a consumer to buy at any price. Most service stations post pump prices on signs 50-feet high outside their stores. Drivers are free to shop around and find the best price they can. If service stations are guilty of extortion because their prices are rising more than their costs, then are we to have pricing police preventing homeowners from selling their houses for two or three times what they bought them for, or movie theaters from charging $6 for popcorn that costs 25 cents to produce, or Barbra Streisand from commanding a $1 million fee for a single performance? Now that Republicans have surrendered to the political expediency of price controls on big oil, they won't have much standing to stop Democrats from imposing price ceilings on pharmaceutical drugs, school supplies, medical equipment, and the like. The irony here is that if there is any extortion or swindling going on in the oil marketplace, Congress is the guilty party. It is Congress that ordered service stations across America to switch last month to ethanol additives that have both raised prices at the pump and exacerbated shortages in recent weeks. It is Congress and state governments that take 59 cents a gallon on average of fuel taxes at the pump -- almost six times the average of 10 cents per gallon profit that the oil companies make. When the House had a chance to take a positive step to increase gasoline supplies and lower prices last week by making it easier for oil companies to expand their domestic refinery capacity -- Northeastern Republicans teamed with Democrats to bring the measure down. The U.S. now consumes 21 million barrels of oil a day but has a refining capacity of only 17 million. As usual, the loudest Congressional complainers about high gas prices voted as a bloc to keep supplies precariously low. Mark this "gouging" law down as the first step back toward the oil and gas price controls of the 1970s. We know that chapter of history ended poorly for American consumers -- with supply disruptions, gas lines, and increased dependence on foreign oil. Under Congress's new brainchild, the next time there is a gasoline supply disruption, service station owners may well hold prices artificially low to avoid jail sentences. As night follows day, that will lead to shortages, lines and stranded motorists. So if Congress thinks that voters are in a foul mood now, wait until their price-control scheme offers them no gas at "non-gouging" prices.