Governments and prices
Whoa! Senate Majority Leader Bill Frist (R-Tenn.) is reported in the Wall Street Journal saying he “might support a federal anti-price-gouging law. Well, a month ago gasoline prices in Minnesota topped out at about $3.30/gal, and now regular gasoline is back to $2.25/gal.
What if a major oil company bought crude oil in the open market in September near the peak of $70/bbl, managed to refine it in one of its refineries not shut down by the hurricanes, piped it 1,500 miles north, and found that it could only sell it in the open market at a loss? Would there be any sympathy for oil company investors? Of course not; oil investors should take their gains and losses quietly.
When governments do intervene in the markets, we see such extremes today as gasoline selling for about $8/gal in Turkey (which imports nearly all its oil and taxes it extravagantly) and 25¢/gal in Iraq (where Saddam Hussein’s legacy unfortunately continues to price gasoline cheaper than water).
Douglas Jones
Nerstrand, Minn.