Thursday, September 01, 2005

Higher Gas Prices: The Silver Lining of Horrid Disaster

So, folks are freaking out about higher gas prices. However, this isn't a bad thing. Gas prices are currently about $3/gallon on average. However, this is distorted by $4-5 prices in areas with serious shortages; i.e. Atlanta, LA, MS, etc.

Frankly, higher gas prices are a good thing. Consumers respond to prices for the most part, not ideology. Higher prices will mean lower consumption and other "substitute" moves to compensate for the price increases. These will include:

1. Buying a vehicle with better mileage;
2. Increased car-pooling;
3. Increased use of public transportation; etc.

We also hear alot about "price gouging" and lots of political attention to this. Frankly, I ask why? It seems like officials in NJ will be wasting alot of time & tax dollars by "inspecting" pump prices. Gasoline is a commodity product; and folks should have to pay based on supply & demand just like any other product. There is no such thing as price gouging. If the price is too high; folks won't buy it. There is no "right" to gasoline. Sorry.

7 Comments:

Blogger W. Lyle Stamps said...

I am the first to do so. For convenience, I've been driving separately to work. Now, for the foreseeable future, my wife and I will communte together to cut down on our gas usage. We don't have to economically, but will do so in order to cut our gas usage. While miniscule, hopefully others will follow and the gas supply can be sent to more needy areas.

Of course, granted, we both drive 50mpg vehicles to start with, so we won't save much; but its a start.

10:06 AM  
Blogger W. Lyle Stamps said...

Ok...first sounds bad. You get the point.

10:07 AM  
Blogger Pris said...

I don't generally agree with much of what you say, Lyle, but I do agree completely with what you've written.

I'll add that I don't own a car, so I walk everywhere. It is amazing that, when all you do is walk, how your impressions of distances change. I now have no problem walking 2 miles to go some place. If people start walking places, it's ceases to be that much of a chore.

10:38 AM  
Blogger Clark Goble said...

The problem is that raising gas prices are a kind of regressive charge. That is, it hurts the poor far, far more than the middle class and certainly than the rich.

For instance I'm cringing and driving less. But it really isn't that big a hardship that my gas charges each month go up $50 - $100. But that amount of money to the poor *is*.

Further the price of gasoline also contributes to general rising of prices on everything else due to the use of oil in nearly all chemicals as well as transportation costs.

11:21 AM  
Anonymous Ronan said...

Lyle,
Mega-high petrol prices in the UK (3 times the US) has the following effect:

1. No Hummers.
2. No increased car pooling
3. No increased use of public transport.

1 out of your 3. People pay what they have to, and no-one is getting out of their cars. Even the lack of huge SUV's has less to do with economy and more to do with narrow roads.

Admittedly, public transport isn't great in the UK, so the alternative is not attractive. But I just want to point out that high gas prices do not always lead to less driving.

11:36 AM  
Anonymous Ben S. said...

The market will listen to high gas prices. I personally view higher gas prices as a long-term positive, as they will force automakers to increase the gas mileage of their guzzlers.

12:04 PM  
Blogger Clark Goble said...

I think the better thing about high prices is how it puts new sources online. (Such as the Alberta tar sands and similar projects here in Utah near Vernal) It also may make wind, solar and the like more competitive. (One wishes it'd make nuclear more likely - but I doubt it will. Too much FUD)

The big issue is what's up with hydrogen cars?

12:51 PM  

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