Archive for Thursday, April 27, 2006

Another way to rein in pump shock

April 27, 2006

Last week as I was reading a Malaysian newspaper online, I came across the headline that indicated gasoline prices would not go up this year. How I wished that would be the case here. The sensitivity that the gas prices are to speculation is beyond my comprehension. I don't know of any other commodity that fluctuates so much without a reasonable cause.

The gas prices in Malaysia and several of the other countries in the world are fixed, albeit more expansive. But the good thing about it is the people never have to worry about blowing their budget on gas. The gas prices are subsidies by the government and any price increase is announced in advance. Usually a two-day advance will cause lines at the gas station to be long, but not unbearable. It was a luxury to know the gas prices were rising, and never more than 10 cents a liter. Even better was the fact that it wouldn't rise again the next day or anytime that week. The government also controls a lot of the prices of consumer goods and services.

I'm torn between the capitalistic business culture in this country and the somewhat socialistic one in Malaysia. I believe in the capitalism that is available here. I do think it's the best option the country can provide its people. But these uncontrollable gas prices have me wishing for some kind of price controls.

The price always goes up much faster than its goes down. Most of you have seen the price go up about 20 cents in an hour. It's hard to imagine a jump in oil prices that is being traded can have such a quick and significant impact at the local gas station.

Some people blame the oil companies for price gauging; others blame the government for not doing enough to provide an alternative energy. I put my blame on the traders and the so-called analysts who constantly put a spin on the trading of oil.

Just like the weather forecasters, they try to predict and speculate the supply and demand on oil, based solely on information and theory that I'm not sure is totally accurate. For example, before every summer, the gas prices go up because of the so-called "driving season." How the analysts are able to predict the increased driving is beyond me. Sure there are a few holidays and family trips that are taken during the summer, but to assume that it's going to put a crunch on the supply of oil is absurd.

What would price control do to the economy and the lifestyle of Americans? Imagine if the gas prices remained the same and you actually knew ahead of time about an increase. Imagine a society where any gas station you went to had the same price. You would never have to worry about searching for the cheapest gas in town. How would this affect the economy of this country or the state? What significant impact would it have on your lifestyle?

I think if that ever happened, it would be euphoria for a while. Then the test of time would prove if price control was good thing for this country.

I have lived a big part of my life in that environment, and I think it might be something that can work here.

Unfortunately, the number of gas stations on every corner would lessen and many individuals who own service stations would be out of business. Is that a price we would want to pay in order to have some kind of decorum in the price of gasoline?

I have a difficult time trying to decide if price control would be a good thing. I have seen it work in Malaysia, but I also appreciate the open market and capitalism that made this country and its people great.

Maybe the best thing to do is to completely ignore the speculators who constantly throw out predictions and forecasts that make the oil market jumpy. I know they are doing their job, but maybe they need to be a little less free with their opinions and let the market create the actual demand and supply, not some suit at Wall Street that thinks this summer we might drive more, just because that's what summers are for.

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