No More Cheap Gas!

Andy Box posted a while back, and again more recently, about why he likes high gas prices. I have to agree.

What!!?? Two people on the same planet actually LIKE paying around $4/gallon for gas!!??

Well, I didn’t say I liked paying those prices. But in principle, I like the fact that gas costs a lot. Andy sees the expense as a driving (pun not intended) force behind people consciously finding ways to conserve gas, and sure, that’s a good thing, but I’ll supplement his thoughts with some of my own. Discomfort is good – it forces people to assess what’s really important. But there’s more.

Expensive gas is an indicator that the free market system is working. The market determines what the price will be over the long haul, which is the way things should be. If some entity (US government, or, in the foreseeable future, a One World Government) steps in and artificially ‘lowers’ the price of gas, things get messed up because the relationship between the supplier and the consumer is no longer the most important factor. If Charlie Consumer stops buying gas from Suzy Supplier because it’s more important for him to have his money than her gas, she loses a customer; if she loses too many customers, she adjusts her pricing. No, she doesn’t go out of business because she buys gas for more than she can sell it for, and here’s the reasoning: if Charlie buys from Valerie Vendor instead because Valerie’s prices are lower, Valerie can afford to offer hers at a lower price, and thus so can Suzy. So Suzy will just make less money but still some. If Charlie buys no gas or less gas because he’s conserving, then there will be more gas to offer everyone else, so people will sell it for cheaper in order to get more business because the supply is greater than the demand.

This works if there are 3 people in the gas market; it also works if the are 3 billion. We hate to wait since we all want things to be more comfortable (cheaper) right now, but over time, gradually, the market will level at a place where the buyers and sellers are comfortable with the price.

If you hate the big evil gas companies right now because they’re charging too much for gas, then just wait, and one of two adjustments will occur:

  • You’ll love it when they have too much product on hand because people like you stop buying, and they have to keep paying billions to store it and pay their employees and such. Then they’ll have to sell off their stuff at a loss.
  • OR, your attitude will change when you realize that the price is fair after all because it’s so important that people are willing to pay the price offered.

So the next time I pay over $50 to fill up my little gas tank, I’ll count my blessings. I could live in a society that would put limits on how much my provider could charge me, but that society would put put other limits on other things that would make me much more uncomfortable.

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