Farmer Ted plants his crop of barley, expecting to make his usual small profit at the end of the season should everything go well.
Well, sometime during the summer, miraculous new uses are found for barley, and suddenly the price of barley skyrockets. He's being offered four, even five times what it cost him to grow and harvest his crop when he takes it to the local grain elevator.
Is Farmer Ted guilty of price gouging?
I think not. Not unless you're the mainstream media. Or as of today, the President.
It costs roughly the same amount of money to produce a barrel of crude today that it did a year, or even two ago.
Yet paranoid traders have bid the price they're willing to pay for that barrel so far up that the price no longer has any correspondence to market reality.
So the oil companies are being paid huge premiums over their cost of production for the oil.
What should they do? Refuse to accept the money? ("Oh no, please, you're being much too generous. Just give us $50/barrel and we'll call it a deal.") Would any other business be forced to deal with this nonsense? Will the government next investigate as price gougers the sellers on eBay who let idiots pay way too much for their items?
As far as not purchasing any oil for deposit into the Strategic Petroleum Reserve, does the President actually think this will work? Sounds like it will just make more oil available on the world market, and that's not really going to affect the prices U.S. consumers pay, not as long as China and other developing countries have an ever growing appetite for oil themselves. I'd be surprised if China alone doesn't buy the oil no longer being deposited in the reserve, keeping the net oil price pretty much where it is.
You want to reduce the price of gas? Build more refineries. Eliminate the need to deliver different blends of gasoline on an, in many states, literally county-by-county basis. Drill for more crude. ANWR, the west coast, etc. Vicente Fox certainly will be happy to pump oil from the Pacific, and he'll be able to do whatever he wants just because his wells will be a few feet south of the border and he really doesn't give a damn what Greenpeace has to say on the subject. Watch Hollywood liberals continue to ride in limos while refusing to allow any off-California drilling to provide gas for said limos. It would almost be humorous if it weren't all so sad.
Seeing the President get sucked into this is more than a bit disconcerting. Perhaps if he went on TV with a flip chart and explained the "Farmer Ted" example some good could come of all this; instead I expect to see him explaining how we're all in this together in a modern update of Jimmy Carter's "malaise" speech.
Illegal immigrants seem to understand economic principles well enough to supply labor to meet demand the Federal Government isn't willing to do anything to step in and curb.
I guess understanding basic economics must be another one of those jobs that "Americans aren't willing to do."
