Tanks A Lot

All this talk about how gas is more expensive than it should be is uninformed. There's simply no such thing as price gouging. No company can charge more for its product than what that product is worth to consumers, lest consumers boycott the product and/or seek alternatives.

I'm not "happy" about gas prices. They have cost me money. Since I drive an SUV, current gas prices have cost me dearly indeed. Still, I have refrained from anger (which is really odd, since I tend to get really angry at things), and I have not echoed the populist rhetoric about some conspiracy between oil companies and the Bush administration. If this is your opinion about the situation, then I'm willing to bet that your "knowledge" of the situation involves not even a basic tinge of market economics. In fact, I'll go so far as to suggest that the bulk of your knowledge comes from one, some, or all of the following sources: the mass media (e.g. TV, radio), the "water cooler," (e.g. some guy at work who acts like he knows everything--and yes, at my work I am that man), or "intuition" (i.e. what you feel but don't really know or remotely understand). Yet another possible "source" of this knowledge is the willingness to blame George W. Bush for everything that's bad. That's why I hate this. It's gotten to the point that I've got to defend a fascist like George II.

Still, even I talk about it, and I am not a so-called expert. However, allow me to state what I know before you dismiss me. I would appreciate any informed criticism of my analysis.

When we talk about prices, we're really talking about value. Prices equal dollars, and for most people, dollars equal a certain amount of time spent laboring in exchange for those dollars. In this sense, money equals time. Since time equals life (that's how we measure it, in years), the price of a given good or service equals a certain amount of your life (in a way, that is--I admit, it's a bit of a stretch, influenced mostly by Thoreau).

With that said, most people discriminate in the market. They buy only those things which they need and want badly. Needs are fixed. Among them are food, water, and shelter (clothing is a form of shelter). Contrary to popular opinion, medical care is not a universal need.

Wants include anything that we seek but do not require for survival. This can include material goods such as jewelry, cable television, computers, or even specific types of goods that might otherwise fall under the "needs" category (e.g. if you live in Michigan, you might need shoes in the winter, but you don't need Timberlands).

Prices for any given good reflect its value, and value is determined by the quantity of the given good or service (i.e. supply) and the intensity of consumers' desire for the given good or service (i.e. demand).

When a good or service is in high demand but in short supply (e.g. an autographed copy of Mark Twain's Tom Sawyer), it commands a very high price on the market. This makes sense. There are very few of these available, but many people would love to get their hands on one. Therefore, the price is very high. This way, the seller maximizes the value of his or her product.

Prices go down only if the supply of a good or service is increased (in excess of any long-term increase in demand) or if the demand for a good or service declines (in excess of its supply).

Therefore, a free market will fix this gasoline "problem." If the price is indeed beyond market value (i.e. where supply and demand meet), then people will consume less gasoline over time (those e-mails about skipping gas stations on Wednesdays or only filling up a quarter of a tank at a time and such are nonsense). People consuming less gas will lead to a decline in the value of gas, and thus a decline in the price of gas.

Also, if gas prices are high for a long enough period of time, people will turn to alternate modes of transportation. Whether this mode is hybrids or buses or anything else is yet to be determined. But if left to the market, it will reflect what most consumers want.

Right now, we feel that gasoline is a need--not a want. That's B.S. I can't tell you how many times my lazy butt has jumped into the car to go a half-mile to the 7-11 for a Slurppee. If I lived closer to my job (and perhaps I will soon, if fuel prices continue to rise), then I can walk to work.

The bottom line is--and I'm here because I've been rambling and it's late; not because I've said all that I can say--stop bitching about gas prices. Either pay for gas or don't. If you do, then you validate the value of the gas and have no business complaining about it and advocating some insane socialist measure to curb the costs.