Sunday, September 11, 2005

A Negative Times A Negative Is A Positive

Sometimes government ineptitude can be a good thing.

Last month I mentioned that Hawaii will be issuing price caps on the wholesale oil. I vowed to keep track of the prices and luckily I found a site that did that for me quite nicely.

After Katrina hit, I noticed something strange. Go there right now and look at the chart. Compare Hawaii's prices with the national average; notice that they don't skyrocket as the mean does even though the law went into affect the first of September. Also notice that while the price of oil does go up, it quickly goes back down. Strange because the economics suggest prices should be leaping.

Then I noticed this article. Here's a telling line: "The governor admits she's not sure the gas cap is forcing up prices because the companies are keeping their wholesale prices secret."

That's right. The goverment was able to create a law telling companies what to charge, but they have no way of knowing if the law is being followed. Thank God they are staying busy pushing string--means they can't do real harm.

2 comments:

Michelle said...

As a Hawaii resident I felt inclined to comment.

It hasn't seemed to effect prices all that much yet, which is nice, because they were predicting prices to jump the day that the gas cap began (I don't quite understand this, but I suppose they were thinking with a manditory cap that buisnesses would raise prices to meet that maximum price.)

It does mean that the news is constantly covering the price of the wholesale cap, and the prices at the pump. There is also a phone number/website that you can use to report problems with the cap... prices still being high, shortages, lines etc. So far the cap hasn't made a difference to consumers here, but then the prices in HI's and on the mainland's are more or less in line with each other, and that is not always the case (which I believe is what the cap was designed to prevent.)

David said...

Economists predicted the price of gas would rise because of the cap because the cap was on wholesale gas prices. Thus stations would have a hard time getting gas (ceilings cause shortages) and would thusly raise the price at the pump. (Check out my post that this one links to; I explain it more indepth there.)

Like I said here, I don't think that gas price is being affected that much because refineries aren't required to report their wholesale prices. The law is kind of like anti-sodomy laws; there's no way to enforce it so the law doesn't really matter.