Regulate gasoline

The price of gasoline always seems a little contrived. Comes a holiday weekend in northern Nevada, and the price of gas goes up.

There’s always a purported reason. This time, the blame is being rested upon the electricity blackout back East, an Arizona pipeline failure and nebulous refinery problems in California.

The problem is that it happens every year, and it seems to happen about the same times. Every time it happens, the media go into hand-wringing mode, looking for culprits to blame for our high prices.

The truth is that it’s market uncertainty, fear, that causes the price to go up—not necessarily something concrete like a pipeline or a refinery.

In the simplest terms, fuel is a commodity, like pork bellies, gold or a bushel of wheat. There are people, fuel brokers, whose main purpose in life is to buy low and sell high to gasoline distributors. Supply and demand are, in theory, the major forces that regulate prices. It’s the free market of capitalism, and it fuels our country.

However, like most commodities, the prices at the wholesale level are based on predictions of what might happen. To put it bluntly, they are set based on what brokers are willing to spend, their ability to hold reserves and what they are willing to risk. The prices are set based on what the brokers’ friends and competitors are willing to buy or sell.

And that’s a problem for the end purchaser, the car-driving public, because the price is not always based on reality or the actual amount of gasoline that exists in the market pool.

In reality, there is only one reason gasoline is so expensive: We are willing to pay the cost, no matter what it is. There is no government regulation of gas prices, no protection for the consumer.

But it doesn’t have to be that way. Hawaii has recently passed gasoline price caps, although it remains to be seen whether they will actually go into effect next July. That law essentially would set caps on wholesale and retail prices for regular unleaded gasoline. Let’s recognize one thing: Gasoline is a utility, same as electricity or water. If people in Nevada are tired of paying contrived charges, we should quit just talking about high prices, and actually do something about them.