We Can Handle The Truth

Prices for everything in an expanding economy are going to go up. That’s just an indisputable economic fact of life as prosperity increases. This effect is only going to be multiplied if demand for a particular item increases at a never-before-seen rate. If we add to this mix the factor that supply is hindered by unreasonable restrictions on the production of the commodity in question, then no one should be surprised if the price for that commodity starts climbing faster than what many expect.

In view of what I have just noted, it’s really remarkable that gasoline is as inexpensive as it is right now. The reality of the twenty-first century is that there are a lot more consumers of petroleum than there were twenty five years ago – most notably in China and India, whose populations dwarf our own. These nations are now demanding this same resource that we have taken for granted for so long at a much higher rate than ever seen before. The law of supply and demand says that in such a situation, where supply is not expanding to keep up with the new demand, prices are to be expected to increase. And we can just go ahead and set aside the notion that demand is going to somehow decrease in the future.

So why not increase the supply? Well, where foreign sources of oil are concerned, we have little control what the governments of oil-producing countries (most of which are dictatorial) do with the resources in their control. And where domestic sources are concerned, there is little to indicate that the people with the ability to open up production yet feel any motivation to do so.

And I’m not talking about the oil companies here. The fact is that oil companies would love to be able to engage in more domestic oil exploration. Oil executives are businessmen, and it would be illogical for a good businessman to not want to exploit new sources of a product that is in such high demand. But they do not have the ability to ease the restrictions that hinder domestic production.

No, those with the ability to change the status quo in this regard are the lawmakers in Washington, enough of whom are beholden to the anti-capitalist environmental lobby that screams bloody murder at any hint that we might need to explore for oil, drill for oil, or even increase refinery capacity within the United States.

And heaven forbid that these politicos should actually consider giving up the revenue they make off of the sale of gasoline in anything more than a token move. The next time you hear any lawmaker, Democrat or Republican, talk about oil companies gouging the consumer at the gas pump, remember that the government’s take off of a gallon dwarfs the take of the oil companies, and then consider where the real gouging is taking place.

Senate Majority Leader Bill Frist says, “We’ve got to help those who are feeling pain . . . as quickly as possible” (For a good conservative like myself, this calls to mind Ronald Reagan’s comment about the most feared words in the English language). But the best thing that government can do in this situation is get out of the way – as in easing the restrictions and requirements on production that make it virtually impossible to solve the “problem” of gas prices in the current circumstances.

Instead, what is being offered by the Senate Leadership, on both sides of the aisle are what has been accurately described by House Majority Leader John Boehner as “insulting” measures. Republicans briefly floated the idea of a $100 “Gas Rebate,” as though buying Americans what amounts to two tanks, or less, would convince the public that government is doing all it can.

For their part, Democrats, while predictably criticizing Republicans for doing the bidding of oil executives, have offered up their own version of insult: Eliminating the federal tax on gasoline – for sixty days. You see, as opposed to the Republicans offer to make things better for two weeks, the Democrats offer to make things better for two months.

Both these moves beg the question: What on earth are the long term benefits/solutions to this present distress that these proposals hold out? The answer, of course, is that there aren’t any long term benefits/solutions. Both these are merely cosmetic moves intended to pacify the wrath of the slow-witted American consumer/voter (think “I feel your pain”) while requiring Uncle Sam to make no real sacrifices of his own cash cow. But the average American who takes the time to rationally think through the origin, and solution, to this “problem” can see that all the politicians are offering is a snow job (with apologies to the new White House Press Secretary).

Just once I wish the suits in Washington would appeal to our intelligence rather than our fears and ignorance. If they would be true leaders and statesmen, set aside the obfuscations driven by political motives and explain/admit to the American people what the problem really is – as gas prices are merely the most visible symptom of the real problem. Then take real action to provide real solutions: Open up domestic exploration and production, bring more refineries online, ease the financial burden placed on gasoline through federal taxes, and, yes, look for other ways – including alternative fuels and vehicles – to reduce the impact that the actions of people in other nations have on our need for energy sources.

None of these things will bring the cost of operating a car, or heating a house, down next week. But it’s time to stop looking at immediate political gain and look to real long-term answers to the needs of Americans. It’s time to stop acting like politicians, and start acting like statesmen.