Gas Prices

Congress has just passed a bill that would make price gouging a federal crime.

Some of you will think that's great and hoot and holler that our government is finally helping 'the little guy' 'stick it to the man.'

And if that's you... you are just ignorant on how prices work.

But don't feel bad. If you have more than 12 working brain cells, I'm going to make you a bit smarter and enlighten you on this subject.

But... if you're absolutely convinced beyond a shadow of a doubt that the prices are 'high' because George Bush wants them that way and 'big oil' is in his back pocket and they're just plain greedy... do me a favor and yourself a favor and please quit reading and go turn on Air America (if you can find it) or go help Jimmy Carter build a house.

Still here?

Good.

First of all... what IS price gouging? I'll bet your definition is something along the lines of charging too much for something. So let's go with that. Let's say I'm going to sell you a box of pencils for $40 bucks. Would you buy it?

Me neither.

Was it a case of price gouging? No, that was me just being stupid and greedy in hopes of trying to sell you a box of pencils for $40 bucks. You didn't buy it and I'm stuck with my pencils.

(By the way, the trusty government defines gouging as prices that are "unconscionably excessive" or "indicate(s) that the seller is taking unfair advantage of unusual market conditions." Best of luck in deciphering that.)

You might try to define price gouging as charging too much for something people NEED. (Who NEEDS a box of pencils?!) Bottled water for $10 bucks a pop like during Hurricane Katrina comes to mind. Let's look at that.

Big, bad natural disaster. People need things. Like water. So you take time off from your job, go buy 2,000 cases of bottled water at Costco, rent a big U-Haul truck and drive 13 hours to the disaster site.

How much will you sell your water for? A buck a bottle? If you do, best of luck making enough money to make it worth your while. And are you really going to drive back home and do it all over again and come back with more water to sell for a whopping buck? I didn't think so. And since you aren't... what about the OTHER people who need water? Since you aren't coming back, what are they to do?

No, you'll sell your bottled water at 5 bucks a pop or more. When the money comes pouring in (hopefully), you can go back home, buy MORE water, then return and sell MORE WATER to MORE PEOPLE.

What's better? Selling your water to 100 people or 500 people? (Forget the emotional aspect... what IS BETTER? 100 people having water or 500?)

'Price gouging' has another advantage. Yeah, you heard me. AN ADVANTAGE. If you were to sell the water for a whole buck a bottle, you're likely to get someone to come in and clean house and buy everything you got.

Which leaves no water for anybody else.

Get the picture?

Here's another example: Hotel rooms. A room that goes for $50 a night might bump up to $200 a night when a disaster strikes.

Now imagine... mom, dad and 2 kids, going elsewhere to leave a disaster decide to go get a hotel room. Usually they get TWO rooms. One for them, one for the kids. But since the room rates are now 400% higher at 200 bucks, they decide to 'rough it' and get ONE room instead.

So now there's another room available for whoever needs it. If the prices had stayed at 50 bucks, the happy family may have gotten two rooms, leaving our nameless, faceless person to sleep in the car instead of a nice, warm hotel room.

I know what you're thinking: 'Yeah, but what about the POOR people who can't afford a 200 dollar room or 10 bucks for bottled water?'

That's secondary. Getting people help first is primary and that's being done. You are more than welcome to dip into your own pocket or take some bottled water to the disaster scene and help. And profits come into play here as well. If you're making a killing on bottled water, you may then be able to AFFORD to give some away to those who can't afford it!

So how does all this translate to what's going on with gasoline prices? Are we really being gouged? Let's look at what goes into setting the price of a gallon of gas.

The oil has to be sucked up from the Earth (expensive process), then refined to make gasoline (another expensive process) and then shipped all over the country to your local gas station (not a cheap process). If you think you can do all that yourself and do it for LESS than three bucks a gallon right, by all means, get to it!

Don't forget that taxes make up a good chunk of the price of gas as well. But don't expect Congress to lower the taxes. Instead, they look to demonize the one's actually making it POSSIBLE to get you gas in the first place: The evil 'big oil' companies.

Now you may hear that 'big oil' makes huge profits every month (or day or hour). True... but at around 10 cents profit (or so) per gallon, you're going to have to pump a lot of gas for them to make that kind of money.

And you are. So essentially... it's YOUR FAULT they make money.

But don't feel bad. I'll gladly share in that blame as well! I'd rather drive my own car than take a bus somewhere or sit at home. Just like you. We're willing to pay that price to drive our own way.

If you think you're getting screwed at the pump now... just imagine what it would be like if 'big oil' decided, 'Screw it. We've made enough. We're outta here.'

Forget that! I'll gladly pay 3.10 a gallon for gas. It sure as heck beats the alternative.