Who's Gouging Who?

Posted on May 05, 2008 | Author: Noah Clarke
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Government should look in the mirror

With gas prices over $3 a gallon nationwide, some policymakers, Attorney General Terry Goddard among them, suggest the solution is to implement price-gouging laws. But the government might want to take a look at the man in the mirror first.

Government has done its fair share to push gas prices higher. Local, state and federal governments tack on 37.4 cents a gallon in taxes in Arizona alone.

Congress’s recent energy bill mandates the use of 7.5 billion gallons a year of ethanol by 2012. Blending ethanol into gasoline may allow it to burn cleaner, but as the Attorney General’s web page explains, part of the price increase is due to the switch from other oxygenates to “higher-priced ethanol.”

The Attorney General’s office also blames higher gas prices on a lack of oil refineries. Here again government imposed environmental restrictions and other regulations have stopped companies from building refineries. There hasn’t been a new refinery built in the U.S. since 1976.

Price-gouging legislation will not resolve the underlying pressures driving up the price of gas. Before pointing fingers at private companies, government should own up to its role in making gas more expensive.

Noah Clarke is an economist with the Goldwater Institute Center for Economic Prosperity.

Key Links:

-Goldwater Institute: “Gas Prices Soaring: Are Price Controls the Answer?”
-Tax Foundation: “Who Profits at the Pump?”
- Wall Street Journal: “Denny Pelosi”
-Arizona Attorney General: “Gasoline”

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