Gas Lines Again

As gas prices continue to soar, I keep hearing more parallels drawn to the energy crisis back in the '70's. Mostly, it's complaints about the rising price of gasoline, a problem that Thomas Sowell addresses in part at Capitalism Magazine.

Why, then, are oil prices so high?

There is no esoteric reason. It is plain old supply and demand. With the economies of huge nations like China and India developing more rapidly, now that they have freed their markets from many stifling government controls, more oil is being demanded in the world market and there are few new sources of supply.

What should our government do?

We will be lucky if they do nothing. But, with Congressional elections coming up next year, that is very unlikely. Candidates for Congress next year, and politicians hoping to run for President in 2008, are virtually guaranteed to come up with all sorts of "solutions."

These "solutions" will be packaged as brilliant new ideas, courageous and far-seeing. But most will be retreads of old ideas that remain untested or which have been tested in the past and found wanting.

Price controls, arbitrary new higher gas mileage standards for cars, "alternative energy sources," and other nostrums are sure to surface once again.

The last time we had price controls on gasoline, we had long lines of cars at filling stations, these lines sometimes stretching around the block, with motorists sitting in those lines for hours.

That nonsense ended almost overnight when President Ronald Reagan, ignoring the cries of liberal politicians and the liberal media, got rid of price controls with a stroke of the pen.

In addition to the problem of supply pressures on oil, we have to contend with additional upward pressures on gasoline prices due to excessive environmental regulation.

I'm afraid that Sowell is right to suspect that politicians will try some of these same approaches again. This will be despite the fact that they have already failed in our own country and, as we can see in the image above, they are failing right now, in China.

-- CAV