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FOR IMMEDIATE RELEASE
May 12, 2006
Contact: David Strom
Ph: (651) 294-3590
Who are the real gougers?
Two bills pass in one day that show political hypocrisy
ST PAUL—Hypocrisy, thy name is politician.
Thursday the Minnesota State Senate proved how well they understand politics and economics.
In two separate votes the Senate moved to simultaneous raise prices for energy and punish energy providers for raising their prices above an arbitrary level the Senate thinks is reasonable.
The first bill, which would require that 20% of electricity generated in Minnesota to come from renewable sources, will inevitably raise prices for consumers of electricity. Currently about 3% of electricity is generated by using “renewable” sources, and some of the much-touted renewable fuel electricity sources cost about 3 times as much as current technology to generate electricity.
The second bill is aimed at punishing “price gougers,” or those who sell gasoline at prices at prices that “grossly exceed” the wholesale cost of gas. The bill actually contains no set definition of price gouging, and as of yet nobody at the federal or state level can provide one. And yet the bill criminalizes an activity, for which there is no definition.
Both of these bills ignore basic realities of economics, if not politics. They are, in other words, gestures by politicians that they care about an issue without doing anything that will help improve the situation for consumers. Often, in fact, these actions make the reality worse.
This is the pattern of late in politics. Lawmakers have simultaneously done things to actually make a situation worse, and then pass a meaningless law to prove they don’t like the consequences of their actions.
A huge spike in the cost of electricity or motor fuels does real harm to real people, and passing laws disapproving of that harm does no real good to alleviate that harm. And yet lawmakers have suppressed the exploration for oil and prohibited its drilling time and again—inAlaska and on the continental shelf, and then are appalled that restricted supply raises prices. US refining capacity is actually now lower than demand for refined oil products like gasoline, and yet it is impossible to increase the number of refineries due to political concerns. It has been more than 30 years since a new refinery has been built.
Lawmakers seem to believe that their intentions matter more than economic and physical reality, but that is no more true for them than for the person who wants to fly so bad that they jump off a building in the hopes that their strong desire outweighs the reality of gravity. Prices are not set by evil old men in mahogany-lined clubrooms; they are set by economic realities of supply and demand.
Ignoring that reality is at best hypocrisy; at worst it is political malfeasance.
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