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Pumping Gas

Pumping Gas

Making Sense, By Michael Reagan

The free market will take care of the gas crisis. People are already taking steps to reduce their fuel consumption, curtailing unnecessary travel, driving slower, car pooling - all things that help reduce demand for gasoline at a time when the law of supply and demand decrees higher prices at the pump.

Nothing, however, is taking care of the gasbag crisis -- the hemming and hawing of politicians doing their darnedest to pump votes out of the gas price hike.

In the process, the people on Capitol Hill are either totally ignorant of the facts behind the crisis, sufficiently cynical to exploit the public's ignorance of the subject, or worse - to misinform them. That's a nice way of saying they lie like rugs.

The facts are not pretty. Gas prices at the pump are not going to drop significantly in the foreseeable future, no matter what Congress or federal and state governments do. Sure, they can lower their take on a gallon of gas, which, as I pointed out last week in my column, is an average of 45 to 46 cents. At best that would be a temporary solution. After all, what government would be willing to long forego a great source of tax revenue?

Despite the spurious claims of price gouging by the wicked oil barons or OPEC or your corner gas station, the reason for the present high price of gasoline is simply this: there are too many people consuming gas supplies and too little gas to meet the need. That's called the law of supply and demand, and no matter how hard the Marxists running the national Democrat party try, it's a law they can't repeal.

Last week I pointed out the profit EXXON made on each gallon of gas it sells amounts to about 10 cents. No matter how much gas they sell, and no matter how high the price at the pump, they make the same 10 cents. Government taxes take more than four times EXXON's first quarter profit, which amounted to more than $8 billion because it sold a lot more gas around the world. Their profit at the pump, however, remained at 10 cents per gallon.

The reason why prices are going to stay high for the foreseeable future is the ever-increasing worldwide demand for crude oil. China and India, for example, are gobbling up massive amounts of the stuff, and are now competing with the U.S. to obtain more and more supplies of crude at our expense.

Once you understand these immutable facts of economics, it's easy to understand how asinine or just plain cynical is the reaction we are getting from Capitol Hill. Everybody is trying either to mine votes out of this issue or figure out how to stay out of the way of angry voters.

Almost to a man, the Democrats are marching to the tune of the old Communist hymn, 'The Internationale,' tossing out solutions from the playbook of Karl Marx. Take Senator Charles Schumer's demand that Uncle Sam take a sledge hammer and break up the oil companies. Aside from the fact that there's not a damn thing in the U.S. Constitution that would allow the government to commandeer a whole industry and shape it as it wants it to be,Schumer'scontention that it would result in lower prices is wishful thinking.

Asserting that he wants to enhance competition - leading to lower prices as the smaller companies compete at the pump by staging price wars - is sheer demagoguery and meant more to score political points than to solve the problem.

Almost as silly was the GOP plan, now tossed out, to give every American $100 to ease our pain we're feeling at the gas pump. I'd be willing to send them $100 if they'd just shut up.

Finally, if you are looking for someone to blame, look at Senator Schumer and his Democrat colleagues and their envirocrazy allies -- this problem could have been solved years ago and we could be awash in gasoline had they not refused to allow drilling in ANWAR, in offshore areas, and by using draconian environmental regulations preventing the building of refineries for the past three decades.

Mike Reagan, the eldest son of the late President Ronald Reagan, is heard on more than 200 talk radio stations nationally as part of the Radio America Network. Look for Mike's new book 'Twice Adopted'. Order autographed books at Email Comments to

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