Headline: "Gas shortages experienced around the country, regulaters miffed while politicians promise to fix the problem"

No this headline hasn't appeared yet, but it a distinct possibility if the current energy bill becomes law. I'm not certain about the bills chances in the house, but I am very hopeful the president will use the veto. It passed the Senate by a somewhat surprisingly large margin: 65- 27. Although there are a few annoying features in the bill, the price gouging issue is the worse.

Our comrades in congress will have the ability to throw penalties at oil companies whenever they feel unloved. This is crazy. In congress' ever expanding need for power they have decided to wade into the gray area of private pricing practices.

This is a de-facto price control mechanism. The threat of penalties will change the natural price signals mechanism. For those of you who have not been through Econ-101 (and it seems a majority of Senators haven't) that means shortages will follow. I wish I had some long technocratic jargon laced explanation backed with fancy math equations that nobody understands, but it isn't necessary. Price ceilings cause shortages. End of story.

So when there are gas lines and everybody is crying "why? why?" they can look back to the 2007 Energy bill for answers.

Serfdom: We're on our way!

Why are Democrats like Senator Schumer insisting that Americans be put on the road to serfdom? Yesterday, comrade Schumer held a hearing to investigate if “Market concentration in the U.S. Petroleum Industry [is] harming consumers”. Instead of simply complaining, I will suggest topics for future Senate investigations.

“Does any legislator understand that it’s idiotic to accuse oil companies of inflating prices by under producing when you take away their incentive by dictating how fuels are produced?”

“An Investigation into how much worse off Americans are when government regulates?”

“Is economic freedom an outdated idea?”

“Why do we laugh at the founders principles?”

“Abandonment of Economics 101?”

“Demagoguery: the death of democracy?”

House Version

Here is a roundup of the bill that was passed in the house by Schumer’s comrades that was posted on Reason's blog, Hit & Run. It is so wonderful that congress is passing laws that create vague language that allow bureaucrats to control target companies and entire industries through fiat. Soon we will be able to break the hold of the bourgeoisie!

"Federal Price Gouging Prevention Act - Makes it unlawful for any person to sell crude oil, gasoline, natural gas, or petroleum distillates at a price that: (1) is unconscionably excessive; or (2) indicates the seller is taking unfair advantage unusual market conditions or the circumstances of an emergency to increase prices unreasonably.

Declares unlawful: (1) intentional reporting of false price information concerning wholesale prices of such products; and (2) market manipulation regarding the purchase or sale at wholesale of such products.

Empowers the Federal Trade Commission (FTC) and State Attorneys General to enforce this Act.

Sets forth civil and criminal penalties for violations of this Act.

Requires fines and penalties collected under this Act to be deposited in a separate fund in the treasury to be known as the Consumer Relief Trust Fund to provide assistance under the Low Income Home Energy Assistance Program (LIHEAP) administered by the Secretary of Health and Human Services."

Truth on Oil

Recent articles in Newsweek and Reason Magazine are finally bringing some sanity to the oil debate. Many people (most of which don’t know anything about oil or markets) claim that there isn’t enough oil to feed world demand. They think that we should begin greasing our bicycle chains and stocking up on candles because the black gold will no longer be around to fuel our debauchery filled lives. Think again.

The Newsweek article completely blows that theory away. Entrepreneurs have found ways to increase efficiency, decrease waste, and utilize technologies that discover unknown deposits. They have been proving the naysayers wrong for over almost a century. Furthermore, reports show that there are enough known reserves to last the remainder of the century along with unproven reserves bountiful enough to last much longer.

But there is a catch. Ronald Bailey correctly reports that many countries are seizing oil assets which may completely destroy the industry. Mexico, Venezuela, and Iran are killing their industries while Russia is doing their best to catch-up. While these governments rape the industry of profits, they deny foreign capital which is essential to new production and technology.

If I have to ride my bike to work in 20 years it will be because of oppressive governments and not a lack of resources.