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Guest column | C.D. Chamberlain

Controlling gas prices isn't solution

A year and a half ago I flew to Costa Rica for a long-delayed visit with family and to have some dental work done. My Costa Rican dentist charges me about 10 cents on the dollar compared to fees here in Hernando and Pasco. Even so, the price of some things in Costa Rica can be pretty steep.

My niece stopped to fill her Toyota's tank. When she got back in the car she explained to me that a fill-up normally runs about $100. My nephew later explained to me that the oil business in Costa Rica operates almost like a utility.

Since the nation has no oil wells, all oil is imported by the government. The government also operates the sole oil refinery. Importing and refining oil is an important revenue source for the government. Both the wholesale and retail price are set by the state. Independent retail dealers make their profit by running an efficient operation. If they are sloppy operators they can't cover their inefficiency by jacking up the retail price. They just have to eat the loss.

I didn't have the heart to tell my nephew this is not quite the way utilities operate in Florida. Utilities in Florida operate like a horrible experience remodeling a bathroom with a contractor who does the job on a "time-and-material" basis. Never does so much material take so long to be installed.

So then I got to thinking: What if we adopted the Costa Rican approach to marketing gasoline in the United States? Of course, that would be impossible.

We would never tolerate our government becoming involved in any business that way. We believe in free market capitalism. The best way to set gasoline prices and make certain we don't have our gas pumps go dry is to let the free market work its magic. Competition efficiently cuts costs and provides us all the gas we need.

At least that is what I thought until I heard some candidates for the office of president expressing their anger over the recent spike of gasoline prices at the pump. They suggest that President Obama ought to do something. What do they want him to do? Interfere with free market competition and bring back price controls? I am sure if he did that there would be an instant lament denouncing government interference. They lambaste him for the government purchase of General Motors stock in order to save countless jobs. Are the champions of free market enterprise now advocating that the president meddle with the free market and attempt to control the price at the pump?

What a gas.

We can't have it both ways. We can't give lip service to free market competition on the one hand and on the other hand react in horror when the market charges all the market will bear. We are experiencing exactly what is supposed to happen. Oil companies are in business to make a profit. And profit is not a dirty word.

Costa Rica, the most prosperous and politically stable Central American republic, is a largely socialist state. A socialist state makes no apology for controlling gasoline prices. We don't want that kind of government here.

So why all this whining about being gouged at the pump? This is what we believe in. Besides, precisely how do we imagine BP is going to pay for all the damage it caused in the gulf? The duty of management is to increase stockholder value. Prices must rise to settle claims.

C.D. Chamberlain lives in Spring Hill.

Controlling gas prices isn't solution 03/15/12 [Last modified: Thursday, March 15, 2012 3:51pm]
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