Jordy Blog

Utah Gas Prices – Where have all the talking heads gone?

A few months ago, I wrote that Governor Huntsman’s “monitoring” of gas prices was just political BS, and that purposely encouraging a misunderstanding of basic economics for political gain was a bad idea.

Well, it turns out I was wrong: just the threat of State oversight made Utah gas vendors stop being greedy, and now Utah enjoys some of the cheapest gas in the nation!

(OK, you’re onto me: that was BS too. But Utah really does have some remarkable gas prices right now.)

Anyway, my friend and former neighbor Kerk (who is also an Economics professor at BYU) has an excellent post that could serve very well as a follow up to my aforementioned rant:

Current Gas Prices (December 2008)

Look at the above map from GasBuddy.com. The price of gasoline in northern Utah these days is about as low as any place in the US. If you live in Utah you know the press here goes into fits of apoplexy whenever gas prices in Utah are higher than the rest of the country. Last Spring all we heard about was how the greedy gas station owners were profiteering and charging unfair prices to Utah drivers. In 2006, KSL radio host, Doug Wright, tried to organize a one-day boycott of gas stations because Utah gas prices were the 4th most expensive in the nation. Now that prices are down no one is talking about who is being unfair to who. Using the same arguments, one could argue that motorists are now colluding to drive down the price of gas and harming gas station owners. Of course this is silly, but it makes as much sense and is just as logical. Inevitably, in the future some time the price of gas in Utah will rise above the national average and our local press will go nuts again. Remember this picture when that happens.

Brilliant!

I think we’d all be better served with an understanding of basic economics. That way we can let our news media go back to talking about family-pet hit-and-runs, celebrity lookalikes, local American Idol runners up, and the like. That’s right, Doug Wright: we should be boycotting you.

Seriously though. Whenever you hear some news anchor or some politician spouting out things that are blatantly stupid, you should ask yourself: “Are they stupid, or do they just think I’m stupid.” Then ask yourself which is better. Do you want news by dumb people, or news for dumb people?

Interestingly, I heard it reported that because of relatively lower wholesale gasoline prices, station owners are actually making more money right now with low retail prices than they were making with high retail prices. Go figure.

Yes, we are being (relatively) gouged on super cheap fuel.

Outrage, anyone?

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Utah to Monitor Gas Prices

The Deseret News is reporting that Governor Huntsman has ordered the Utah State Department of Commerce to monitor gas prices.

That’s just politics as usual, but I’m alarmed by how many people here in “conservative” Utah are commenting that they want the government to step in and “do something” rather than just “monitor”. It’s like we’re all living in some fantasy land where socialism works…

Attention people: price controls only ruin your quality of life. Prices that are artificially low cause shortages, and shortages mean hoarding, rationing, and long lines at the pump. Some days you just won’t get any. Do you seriously want that?

We should be thankful that the State is only “monitoring” for now. Ideally it wouldn’t be monitoring at all, because that’s a slippery slope –especially because political motives are involved. Plus, “monitoring” could be easily be done by an activist group or a not-for-profit –and they could do it without spending your tax money. That said, I will be interested to read the DoC report; I just wish it were generated by someone else and on someone else’s dime.

By the way, where were the government monitors a couple months ago when Utah enjoyed the lowest prices in the nation?

Prices fluctuate. If they’re unfair to either party, the market will insure that they become fair. That’s how free markets work. No intervention is necessary; in fact, intervention is almost always counterproductive.

Utah, the nation, and the world need a healthy dose of Econ 101. We shape our governments by our will, and if the voting public is ignorant of basic economics, our stupid will may well lead to our own demise.

I highly recommend Sowell’s Basic Economics: A Citizen’s Guide to the Economy to anyone who wants an excellent treatise on economics, especially as it pertains to government.

Arson, Rent Control, and the Perverse Incentives of Socialism

Allan Young plugged my last post in a piece he wrote about the potential of arson as a scapegoat of housing-bubble hardships.

His post reminds me of a similar report of arson, this time related to government rent control.  In Thomas Sowell’s excellent book, Basic Economics – A Citizen’s Guide to the Economy, he explains that in places where the government puts price ceilings on rent to make housing more affordable, rental properties often suffer major losses, and many owners end up torching their own properties to avoid suffer ongoing losses.  This trend is well-documented, by the way.  Introduce rent control in a city, and you can bet the level of arson in that city will increase.

So a socialistic program intended to make housing more available will actually make it less available; and because artificially low rents ensure that existing housing is filled while reducing profit incentive to build more housing, renters who might have a place to live under a free market system are forced to flee to another city without rent control, or become homeless.

Yes, it’s just another example of the way the perverse incentives of socialism love to backfire.

Anyway, the arson connection is interesting.  The Government should look at the real-world incentives of policies it creates, which often trigger results exactly opposite of those it intends.  The incentives leading to crash of the housing market demonstrate the exact same principle, but I’ll cover that tomorrow.