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What a Gas
June 22nd, 2008George Bush the 1st learned that mucking in markets is madness.
Bush the Elder imposed a 10% luxury tax during his only term as President. This tax on consumption by well-heeled folk had the peculiar effect of eliminating most of the Florida yacht building industry. Wealthy people (Republican-defined wealthy, not Democrat-defined) ran the numbers, determined they could buy yachts in neighboring countries for less and take a nice little vacation to pick up their boat with the spare change. And they did.
Fiberglass layers, engine mechanics, and sail makers … you know, the blue collar vote … all lost their jobs while Sunshine State yacht building companies tanked.
If anyone is wondering why gasoline prices are so high these days, a good first place to look is government and how they have mucked in the markets.
China admitted as much today as they raised gasoline prices by 18%, which is not a price hike at all.
China and India both are in hyper growth modes. Since most of their population is poor, and since continued industrialization requires energy and transportation, these countries subsidize gasoline prices. So does Iran, Venezuela, and other nations run by advanced-stage syphilis patients.
Gasoline in those countries is less expensive than the market would otherwise demand, and as a result, gas and oil consumption is higher than it would otherwise be. This artificially high demand creates artificial shortages, which causes prices to artificially rise.
Oil has risen, climbing 100% in the last year alone.
An unintended consequence of market meddling is that the difference in the artificially low price of gasoline and the artificially high price of oil is paid for by these insane regimes. This is the real reason why China is reducing subsidies in order to raise prices: they can’t afford to keep paying the ransom they created.
Monkey with any self-balancing system (like an open market economy) and the system falls out of balance. Typically it falls on the people who tossed the monkey wrench into the machinery.
