FOXNews.com: 8 secrets about gas prices every American needs to know

FOXNews.com FOX News Network - We Report. You Decide. // via fulltextrssfeed.com

8 secrets about gas prices every American needs to know Mar 12th 2012, 20:21 Politicians and talking heads are doing their best to make us confused about gasoline prices.  Here's a little clarity. Secret 1: Oil companies don't control gas prices. "Supply" is the ability of producers to make a profit at a given gasoline price. "Demand" is the willingness of consumers to buy at a given gasoline price. Supply and demand are impacted by numerous factors--restrictive policies at home and abroad, growing demand for oil, future uncertainty in the Middle East, the prospect of future inflation. None of these factors are affected significantly by any private oil company. Secret 2: We get a great deal on gasoline. It's easy to get angry when you see higher prices at the gas station but not the higher prices people are paying at other places. But the reason gas prices can go up more rapidly than other prices is this: when demand for other goods goes up or supply goes down, it's easy to substitute--you can buy apples if the price of oranges goes up. But with gasoline and other oil-based fuels, the alternatives are way, way more expensive. So when demand goes up or supply goes down, we are willing to pay $5 a gallon. Instead of being angry, why not be thankful we're getting such a great deal? Secret 3: Oil companies lower our fuel prices. Since oil companies are producing the best portable fuel on the market, without them we would have much higher transportation prices. So we should thank the oil companies for saving us money, not praise other industries, such as solar and wind, that can't come close to meeting our fuel needs. Secret 4: "Windfall" profits mean windfall savings in the future. The fact that oil companies make so much profit at current prices is great. Not only did they earn it by making the best product, but the more profit they make the more they have to invest in future production and the more incentive others have to get into the portable fuel market. Which means more investment in the future. If gasoline was barely profitable at current prices, that would mean less investment and higher prices in the future. Secret 5: Oil companies are creating their own competition. The most promising substitute for gasoline may well be natural gas--whether converted into diesel, compressed or liquefied natural gas--since gas is being sold at incredibly low prices right now. Who produces much of that natural gas? Oil companies, aka oil-and-gas companies! Those "greedy" oil companies are the leaders in creating their own competition! Why? Because you can't run from competition if the market is free. Secret 6: Speculators are our allies because they protect us from the real enemy: government intervention. Those "speculators" who buy oil do so because they are worried about  1) restrictions in oil production around the world and  2) future US inflation given the Fed's money-printing.  Good for them.  Why are we shooting the messenger instead of criticizing our government's policies? Secret 7: Artificially lower gas prices would mean shortages. Some critics seem to think that if the oil companies wanted to, they could just lower gasoline prices by a dollar. If they did that, people would buy extra gasoline at artificially low prices, and there would be shortages. That means delays on moving everything, from food to medical supplies. "Cheaper" gasoline would be far more expensive in its consequences than $7 a gallon gasoline. Secret 8: The best thing the government can do when it comes to gasoline prices is stop what it's doing. The only thing the government should "do" about gasoline prices is liberate energy production of every kind as quickly as possible, to maximize competition and lower prices. The idea of debating over a drilling rig based on whether it will immediately lead to $2.50 gasoline is exactly the kind of restrictive mentality that makes fuel artificially expensive.  We can't expect politicians to think long-range, but we don't need them to; we just need them to get the hell out of the way of the energy producers who do think long-range. Alex Epstein is the founder of the Center for Industrial Progress. Related Stories Survey: Obama's ratings drop as gas price soar Bad News From Middle East Looks Worse for Obama Amid High Gas Prices EPA heightens scrutiny over Pa. gas drilling Obama: Fuel efficiency an answer to rising gas prices

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions