Thursday, August 25, 2005

Neal's real,

The following is an article by Neal Boortz:

Gas is pretty expensive right now, and while not yet a record, it's getting up there. So the politicians in the state of Hawaii have hatched a plan. What better way to deal with rising gas prices than government-implemented price controls? Everybody wins, right? The politicians win because they get to enjoy the added popularity their forced price discounts impose and consumers win because gas will be cheaper. What's not to like? Well, there's only one problem with price controls: They never work. First, a little economics lesson for the government-educated among us. Prices are set by market forces. Yup...good 'ole supply and demand. If there is greater demand for something than supply, prices will go up. Every time, without exception. Everybody in the supply chain has a cost. Along comes a politician, wanting to distort those market forces and implement a little communism. So Mr. Politician sets a price control. What suffers? The first thing that always suffers during price And it's already happening in Hawaii as a result of this stupid plan. Beginning September 1, gas wholesalers won't be able to charge more than $2.74 a gallon. But what happens when the market price goes above that and nobody involved is making any profit? No more gasoline. There are two refineries in Hawaii owned by two different oil companies. One of them already says it may need to close one of those refineries. So which would be better? No gas at all or plentiful gas at the going market rate? Only one is going to make your car go. But no matter...our government schools have done a good job educating the masses on the subject. Check out this quote from the AP story on Hawaiian price controls...a 25-year-old student: "The gas prices that are continuing to go up — how am I supposed to afford it?" Well, he won't have to worry about that...because there won't be any gas to buy. Capitalism: it works every time it's tried.

Neal Boortz