Supply and Demand - Not Just a Good Idea, It's the Law

Every time something like a hurricane comes up, we hear a word that we hear at no other time -- Profiteering. Today Hurricane Ike is coming ashore in Houston. The offshore Drilling platforms have been shut down. The petroleum refineries have been shut down and secured. The pipeline pumps have been turned down and ultimately shut off. There is no more coming for a few days or even weeks.

The price of gasoline shot up. One station in my immediate area, which is normally known as a cheap station in an especially cheap area for gasoline, had unleaded for a while at $5.25 a gallon. The television is stridently complaining of price gouging. The Governor (a Republican) has declared a state of emergency which punishes profiteering.

What was lost in that Paragraph? Capitalism. Supply and demand. Private Property. Note first that it is his gasoline. Mr. Patel bought that 5000 gallons of that gasoline yesterday at the risen price. It is his not the Governor's gasoline, nor yours, nor mine. When the price goes back down next week because the supply has been restored, he will not get a refund to the then price. His base price will be yesterday's spot price. He does not have to sell it at all, which may well be his decision. But he will have gasoline to sell you when the others have all sold out; and what will it be worth to you then?

Government controlled rationing will always cause shortages -- not worth it to buy to sell, hoarding, diversion to politically expedient markets.

Price rationing, voting with your feet (wheels?), creates not just a more even flow; but it causes conservation as it makes us, the end user, decide how much a particular trip is worth to us. But raising the price has another effect -- it makes it attractive for someone to step up and take the risk to fill the void.

We have seen this in other things, too -- plywood, ice and even water. Several years ago there was a man here in Atlanta who bought a truck load of plywood at Home Depot and drove it to South Florida to sell after he heard on the television that the stores down there ran out. He was arrested for profiteering and his plywood taken away from him. The same thing has been done over bottled water and I have even heard of it happening over generators. What do you bet that those people have learned their lesson? This time that plywood is still sitting on the shelf at Home Depot here in Atlanta.

To each according to need, from each according to ability, it's the Democrat way.

p.s. Just wait till the government rations healthcare.

I surprised myself

I have been saying this for a while, but it caught me again. Can it be anything but a conspiracy to keep us stupid?
Ask everyone you know. "Why is gas so expensive?" I have heard the usual litany - "Speculators". "Big oil". "The Arabs".
The answer is , of course, gasoline is cheaper than it was in 1964. Huh?

In nineteen-sixty-four, the Dollar was an instrument called a silver certificate. It equaled and was exchangeable for one silver dollar at any bank. It was also in nineteen-sixty-four that either dollar equaled and was also exchangeable for four gallons of gasoline.

A mere 100 days after the death of President John F. Kennedy President Lyndon Johnson accomplished a goal he had since he was an assistant to Senator Sam Rayburn in the early days of FDR. He demonitized silver and removed the requirement that there be an actual "dollar" for each certificate in circulation. In essence he made the bill the dollar.

Little-by-little, the currency inflated. Now, in 2008, we take those two dollars and see what they buy. The paper one now buys one quart of gasoline - one sixteenth the amount of gas that it bought in 1964. But what of the silver dollar? At today's spot fix for silver and the price I paid for gasoline this very afternoon, one silver dollar would have bought not four gallons of gas as in 1964, but five full gallons of gasoline.

So as you listen to people blame everyone in sight for the so-called high price of gasoline, remember, they are not blaming the groups really responsible for the slipping of our savings and decline of our real salaries, the bureaucracy of the Federal Government and our own Representatives. They are misdirecting us to see the dollar as a constant and gasoline as a variable. But seal up a jar with one gallon of gasoline, and one with a one dollar bill. Come back in ten years and see which one has lost its value.