Back in August of last year, I noted that Hawaii had introduced price controls on gasoline. Here is part of what I had to say:
Hawaii, for those Hawaiians unaware of the fact, is an island group waaaay the hell out there in the middle of the Pacific Ocean...every drop of fuel used in Hawaii has to come from elsewhere - and from a far away elsewhere, at that. There's just no way in economics that Hawaii's gasoline prices will be as cheap as gasoline prices elsewhere in the United States. If you start capping what suppliers can make in Hawaii, they'll just send their supplies elsewhere...why go through all the hassle of shipping to Hawaii when you can make more money off your supplies in, say, California or Oregon?
And now we get this news story:
HONOLULU - Hawaii's gasoline price controls have sputtered to a stop.
The island state whose drivers pay the highest pump prices in the nation has given up on price caps after an eight-month, first-in-the-nation experiment. Some complained that the restrictions actually led to higher prices...
Price controls never, ever work. And yet they are tried again and again - and now we see various efforts (some of them, shamefully, from the GOP) to control gas prices in the United States. The price of gas is what it is not because of Evil Oil Executives plotting our ruin, but because it costs that much to get gasoline in to your car while providing a profit for everyone involved in getting the gasoline from the ground to the gas pump - with, of course, some high government taxes tacked on to make certain you feel the pain of the pump. The only way government can immediately cut the cost of gasoline is to cut the taxes on it - but that leads to other problems, so its not just an even trade.
There are three ways for us to bring down the price of gasoline - two of them are: use less of it, make more of it. As our refineries are running close to capacity and given that our cars have become an integrel part of our lives, niether of these things are going to happen. That brings us to the third option: replace it with something else.
This is my preferred solution, and why I'm such a big backer of nuclear power and converting to hydrogeon powered vehicles. We have, contained within our borders, all the energy we need for any conceivable purpose we might think up - all we need do is tap into it. This takes an act of political will, and it is just too bad that right now only the President and a few GOPers are showing the courage to lead the way.
HAT TIP: Dean's World
Posted by Mark Noonan at May 9, 2006 04:39 AM
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Comments
Very frustrating to see them do this over and over. ;-(
Lots of stuff on the topic at my blog if interested:
http://amateureconblog.blogspot.com/
Posted by:
Christopher Meisenzahl at May 9, 2006 07:00 AM
nixon & carter both attempted price controls &
both failed.
money has its' own rules which blohard politicans cannot change.
ask the unions & the border agents.
comprende?
Posted by: OhioOrrin at May 9, 2006 07:08 AM
I spent three weeks in Honolulu last February on business. The raised and lowered the the max price of gas a couple times. The gas stations just charged the maximum allowed. The state said they could charge a maximum so they did. No competition, they all just charged the same price. I think I saw ONLY one station charge a few pennies less over near Sschofield Barracks and I was all over that island.
If you tell them they have a maximum price they can charge, they will charge the maximum.
VW
Posted by:
Violence Worker at May 9, 2006 08:22 AM
So it seems we agree on something after all...
I will qualify your claim that "price controls never, ever work", though, because it's not 100% accurate. Here in the U.S. price controls were in place during WWII (administered by the late J.K. Galbraith), and they kept inflation very low throughout the war years, in marked contrast to our nation's experience in WWI. Unfortunately, this success gave misplaced confidence to would-be economic central planners (thankfully, those advocating for central plannning had much less success here in the U.S. than they did in India, Britain, France, etc.), and this was one of the fatal misconceptions that F.A. Hayek attempted to discredit in The Road to Serfdom.
Price controls make sense when the state defines the goals of production, but this rarified environment only exists with modern total war. The fatal misconception of central planners is that in a peacetime economy the only efficent way is for consumers to define the goals of production, not the government. and no government can possibly keep up with the needs and wants of consumers as expressed through such a complex and varied a system as the modern market.
Price controls didn't work under Nixon (economically, that is -- I've seen the argument made that they worked politically by boosting his approval ratings), why did anyone think that price controls would work today? What's even more amazing is that they enacted price controls for on a little island for perhaps the most global of commodities. Pretty stupid.
Posted by: mun13f at May 9, 2006 09:33 AM
Mark,
You are touting hydrogen powered cars. Yet, those cars are still a way off in the future. In the mean time, I got myself a Jetta Diesel, which gets 42+ miles to the gallon. But I do not only use Diesel. VW allows a 'fuel additive' called BioDiesel up to five percent, read B5.
So, in short: 'B5 - Vitamins for my car and it is good for the environment and produced locally, too.'
Please, do some research on it right here http://www.biodiesel.org/ and other places, too. You'll see that this is an immediate solution for high gas prices, as well as a way to shut up those enviro wacos.
BioThomas
Posted by: BioThomas at May 9, 2006 09:57 AM
1) Your "it costs that much to get gasoline in to your car while providing a profit for everyone involved in getting the gasoline from the ground to the gas pump" is a bit formulaic and naive. However...
2) I am with you on the idea that oil has to be replaced with something else, and if you are pushing fast-breeder reactors, I'm with you on that too. The common light-water reactors are inefficient, which is important since we can't burn uranium in them much longer than we can rely on oil. We just don't have that much uranium.
"Such a reactor can produce about 20% more fuel than it consumes by the breeding reaction. Enough excess fuel is produced over about 20 years to fuel another such reactor. Optimum breeding allows about 75% of the energy of the natural uranium to be used compared to 1% in the standard light water reactor"
Fast-breeder at Hyperphysics
Fast-breeders can also be used to consume existing nuclear waste, including unwanted weapons grade material, and leave behind waste that is hot for hundreds rather than thousands of years. Yes, they have problems-- like the risk of explosion-- but if we are going nuclear it is the only reactor that makes sense.
Posted by:
themaiden at May 9, 2006 11:23 AM
No Nukes! Get as many homes and businesses as possible off the grid using solar power. The excess generation can be sold to those still on the grid. Peace
Posted by: steve at May 9, 2006 02:52 PM
I agree. The worst thing is Govenment control. Second worst is Monopoly. If we really need a relief at gas pump, we need bring real competition.
Posted by: Andy at May 9, 2006 02:53 PM
Darn Biodiesel you had some good points then spoil it by calling us enviro wacos.
But thanks for the link. I am always looking for ways to save my money and make the air cleaner.
You're not a biodiesel salesman are you?
Posted by: Ash at May 9, 2006 08:54 PM
Post a comment
Very frustrating to see them do this over and over. ;-(
Lots of stuff on the topic at my blog if interested:
http://amateureconblog.blogspot.com/
nixon & carter both attempted price controls &
both failed.
money has its' own rules which blohard politicans cannot change.
ask the unions & the border agents.
comprende?
I spent three weeks in Honolulu last February on business. The raised and lowered the the max price of gas a couple times. The gas stations just charged the maximum allowed. The state said they could charge a maximum so they did. No competition, they all just charged the same price. I think I saw ONLY one station charge a few pennies less over near Sschofield Barracks and I was all over that island.
If you tell them they have a maximum price they can charge, they will charge the maximum.
VW
So it seems we agree on something after all...
I will qualify your claim that "price controls never, ever work", though, because it's not 100% accurate. Here in the U.S. price controls were in place during WWII (administered by the late J.K. Galbraith), and they kept inflation very low throughout the war years, in marked contrast to our nation's experience in WWI. Unfortunately, this success gave misplaced confidence to would-be economic central planners (thankfully, those advocating for central plannning had much less success here in the U.S. than they did in India, Britain, France, etc.), and this was one of the fatal misconceptions that F.A. Hayek attempted to discredit in The Road to Serfdom.
Price controls make sense when the state defines the goals of production, but this rarified environment only exists with modern total war. The fatal misconception of central planners is that in a peacetime economy the only efficent way is for consumers to define the goals of production, not the government. and no government can possibly keep up with the needs and wants of consumers as expressed through such a complex and varied a system as the modern market.
Price controls didn't work under Nixon (economically, that is -- I've seen the argument made that they worked politically by boosting his approval ratings), why did anyone think that price controls would work today? What's even more amazing is that they enacted price controls for on a little island for perhaps the most global of commodities. Pretty stupid.
Mark,
You are touting hydrogen powered cars. Yet, those cars are still a way off in the future. In the mean time, I got myself a Jetta Diesel, which gets 42+ miles to the gallon. But I do not only use Diesel. VW allows a 'fuel additive' called BioDiesel up to five percent, read B5.
So, in short: 'B5 - Vitamins for my car and it is good for the environment and produced locally, too.'
Please, do some research on it right here http://www.biodiesel.org/ and other places, too. You'll see that this is an immediate solution for high gas prices, as well as a way to shut up those enviro wacos.
BioThomas
1) Your "it costs that much to get gasoline in to your car while providing a profit for everyone involved in getting the gasoline from the ground to the gas pump" is a bit formulaic and naive. However...
2) I am with you on the idea that oil has to be replaced with something else, and if you are pushing fast-breeder reactors, I'm with you on that too. The common light-water reactors are inefficient, which is important since we can't burn uranium in them much longer than we can rely on oil. We just don't have that much uranium.
"Such a reactor can produce about 20% more fuel than it consumes by the breeding reaction. Enough excess fuel is produced over about 20 years to fuel another such reactor. Optimum breeding allows about 75% of the energy of the natural uranium to be used compared to 1% in the standard light water reactor"
Fast-breeder at Hyperphysics
Fast-breeders can also be used to consume existing nuclear waste, including unwanted weapons grade material, and leave behind waste that is hot for hundreds rather than thousands of years. Yes, they have problems-- like the risk of explosion-- but if we are going nuclear it is the only reactor that makes sense.
No Nukes! Get as many homes and businesses as possible off the grid using solar power. The excess generation can be sold to those still on the grid. Peace
I agree. The worst thing is Govenment control. Second worst is Monopoly. If we really need a relief at gas pump, we need bring real competition.
Darn Biodiesel you had some good points then spoil it by calling us enviro wacos.
But thanks for the link. I am always looking for ways to save my money and make the air cleaner.
You're not a biodiesel salesman are you?