There are many reason the price of gas is higher than it otherwise would be in a pure market setting. But one reason has received virtually no attention. Gas imports are taxed more highly than oil imports, a protectionist arrangement that benefits domestic refineries (in the short run) but harms consumers every day.
First some background.
As Dwight Eisenhower was leaving office, he warned against government overexpansion from the accumulation of political power in the military-industrial complex. As an experienced general, he said that, even for the constitutionally enumerated function of national defense, we must “avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage.”
“Something is rotten in the state of Denmark,” the officer Marcellus claims in Shakespeare’s Hamlet. Well, that goes for all of Europe. People in Europe like to complain about the “horrors” of the American way of life. It is, so they say, so coldly individualistic (interpreted as the very opposite of what’s good), and it is a danger to the environment, public health, and so on. This view of America as “evil” is today an essential part of political life in Europe.
Alabama Attorney General Troy King was recently on Fox News boasting about how he would go after those gas stations that “profiteered” after Hurricane Katrina. He noted that many economists have criticized anti-gouging laws that interfere with the function of the free market, but his response was that it was Hurricane Katrina that interfered with the market.
BIS Chief Economist, William White, starts a newly-posted working paper contrasting Keynes’ egregious ‘long-run’ quip against Mises’ measured counter.
