The House of Representatives just passed a bill that would make gas-price gouging a crime:

Wednesday’s action came as Congress prepares to face voters during its weeklong Memorial Day recess. Gasoline prices hit a record national average of $3.22 for a gallon of regular Wednesday. Even if approved, the impact of the legislation is uncertain. The biggest question is how price gouging would be defined. Violations would carry penalties of up to 10 years in prison and a fine up to $2 million for an individual and up to a $150 million for a corporation.
“We’ve heard a lot from constituents about high gas prices,” said Mike Shields, Reichert’s chief of staff. “Prices are going up despite lower costs per barrel.” Instead, he said, the prices reflect that demand for oil is up. The markets were doing what markets do, he said, noting: “If you don’t have more of it, prices are going to go up.”

A lot of people are pissed off about current gas prices, as evidenced here.

It’s easy to blame Exxon, government, lobbyists. But there are a few questions you need to ask yourself first.

1. Is gasoline really that expensive?
The answer is: not really. As Byron King from Whiskey and Gunpowder points out:

$3 per gallon of gasoline is less than 19 cents per cup. What would you pay for a cup of coffee at McDonald’s or Starbucks? What do you pay for a gallon of Coca-Cola?

2. What exactly does “price gouging” mean when it comes to gas prices?

How do you know that charging $5 per gallon of gas isn’t reflecting the true price of gas? It’s simple economics - supply and demand. If there is a high demand for a product, the price of the product will rise to meet the demand. Eventually things will even out as demand drops.

Ah, but people need gas, you exclaim! They don’t need Starbucks (well, Alyx does but that’s another story).

And I say: So what? Whether we need it or not is irrelevant.

Know why? Because oil is a scarce resource. Requiring a resource to be “cheap” is to require an unlimited supply of it. And there ain’t any.

People think that because gas prices have shot above oil prices that we’re being ripped off.

Ah, but you can’t run your car on the oil that comes out of the ground. It’s got to go through a refinery first. And how many refineries does the United States have at it’s disposal?

Oil Refineries

From Wikipedia:

Refineries pre-dating the EPA were very toxic to the environment. Strict legislation has mandated that refineries meet modern air and water cleanliness standards. In fact, obtaining a permit to build even a modern refinery with minimal impact on the environment (other than CO2 emissions) is so difficult and costly that no new refineries have been built (though many have been expanded) in the United States since 1976. As a result, some believe that this may be the reason that the US is becoming more and more dependent on the imports of finished gasoline, as opposed to incremental crude oil.

The NIMBY Factor

Article from Slate:

America needs oil. You’d rather have a beach condo

It makes sense to refine oil relatively near where it is produced or—in the case of imported oil—near its port of entry. the largest clusters, as one might expect, are near the water and population centers: the Gulf Coast, coastal California, the Great Lakes, and the Northeast. Unfortunately for refiners, about half of Americans live within 50 miles of the coast. And because of the concentration of people—and wealth—near the continental shelves, land is simply more valuable the closer you get to the water. As a result, shore dwellers have the most to lose from developments that might affect quality of life.
Refiners want to be near the water, but now it’s practically impossible for them to find a place to build. Refineries are high on the list of least-wanted industrial sites. This report from the California Energy Commission notes that even though 10 refineries representing 20 percent of the state’s refining capacity were closed between 1985 and 1995, “it is unlikely that new refineries will be built in California.” Why? Locals are concerned about the environmental impact of refineries, their contribution to smog, their traffic of giant trucks carrying hazardous materials, and the potential for devastating leaks in event of an earthquake.

So you see, things are coming to a head. Everyone wants to have their cake and eat it too.

Urban Sprawl and Car Culture

King says

Quite a bit of what passes for the culture of the nation is really a reflection of the price and availability of energy. Cheap energy has given rise to a culture of physical dispersion, if not sprawl, coupled with a sense of personal entitlement to private and energy-intensive forms of transportation, housing, and many other things. People used to live in or near the urban cores and take streetcars everywhere they needed to go. Just beyond the end of the streetcar lines, it was farmland. But in the past 50 or 60 years, we have built roads everywhere and filled them with automobiles. So the current demographic of Pittsburgh, for example, now sprawls all over Allegheny County and into five adjacent counties. It is not that most of the commuting culture is what you call ‘essential’ transportation. It is just that this is the energy-intensive existence we have created for ourselves. It was great when oil was cheap, although not sustainable. And now that oil is expensive, we have to ask if we have to change our cultural expectations. If not, we are about to have some very big problems.

Bingo.

Wikipedia defines urban sprawl as:

the spreading out of a city and its suburbs over rural land at the fringe of an urban area. Residents of sprawling neighborhoods tend to live in single-family homes and commute by automobile to work. Low population density is an indicator of sprawl.

We are living in a state of urban sprawl, brought on by car culture, which started in the 40s and 50s. Subdivisions, gated communities, huge highway systems, and strip malls were created by suburbia and urban sprawl, which was created by car culture, which was created because gas was cheap.

Now that gasoline isn’t as cheap anymore, everyone is freaking out. Maybe they should have thought ahead. Perhaps creating a society around an energy source that can’t be maintained forever wasn’t such a good idea. Make no mistake: capping the price of gasoline will lead to gas shortages and long lines reminiscent of 1973 and ‘79. What’s next? Rationing? Ask communist countries how well that works.

Remember what Byron King said:

The price of gas is rising because there are more people buying it than there are selling it. And there will be, for the rest of your life.

~BillG