Monday, March 12, 2007

The Real Reason for the High Price of Gas

Well, I don't know what the real reason is, because there are many reasons. But an interview tonight on the local news of an economist at UC Berkeley surprised me. Not what he said, but that it was on the news. His opinion was that refineries across the country were what he called "boutique" refineries. That is, they catered to the specialized formulas of gasoline used in each region of the country. The various environmental laws and regulations in each region necessitate unique gas. California has the most strict environmental laws in the country, and we have the most expensive gas.

But the reason for the relatively high prices is that there is no competition. We can't use somebody else's gas (this situation is forced upon us by law, of course) so supply is extremely limited, while demand remains the same. That results in high prices. Isn't it ironic that the same group of people who blame the oil companies for such high prices are the ones crying for greater regulation that result in higher prices? Well meaning ignorance and the law of unintended consequences always seem to go hand in hand. Indeed the road to hell is paved with good intentions.

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