Making Matters Worse

The price of gasoline at the pump reflects the relationship between the supply of available gasoline and the demand for gasoline. Government intervention that lowers the price of gasoline without government intervention that also increases the supply of gasoline can only result in a shortage of available gasoline. Government intervention that reduces the profits for selling gasoline without government intervention that also reduces the demand for gasoline can also only result in a shortage of available gasoline.

Senator McCain wants to declare a holiday on gasoline taxes. Senator Obama wants to make oil companies pay a windfall profit tax on the excess (sic) profits from gasoline. Is it asking too much to ask for a serious Presidential candidate who understands that government intervention is causing the problem of gasoline shortages and higher prices, not leading to the solution of more gasoline and lower prices.

The market solution that will lower the price of gasoline is to allow existing oil companies to explore and drill in more places and for new competitors to enter the oil industry with the expectation of making an above average profit. More production of gasoline will lower the price of gasoline and meet the demand for gasoline.