Here is 51 second verbal home run scored against our current administration.

I’m sick and tired of hearing about Obama and the White House coming out with yet another crisis that has to be fixed by government sticking it to the people and taking more of what we earn and produce. Instead of allowing our small businesses, especially, to keep more of what we earn and produce, and then reinvest according to our own priorities. So that we can grow and thrive and hire more people. That’s how we create jobs. That’s how the economy will get roaring back to life.

But see, too many in the White House, including our own president, I don’t know when they have run a business. I don’t know when they have been a CEO of anything where they’ve had to look out for the bottom line, and they’ve had to make payroll and live within their own means with a budget. You know, they’re from government. They’re community organizers. They’ve been spending other people’s money for so long that I think a lot of the free enterprise principles that so many of us believe in, it’s all foreign to them.

For someone whom the liberal media tells us is dumber than a box of rocks, former Governor Palin understands better than this administration how the economy works and grows, and it isn’t from the government spending money while lurching from one crisis to another.

I have received several of the following emails in the past two weeks from a number of different people. For the sake of discussion, here’s the email:

This was originally sent by a retired Coca Cola executive. It came from one of his engineer buddies who retired from Halliburton. It’s worth your consideration.

Join the resistance!!!! I hear we are going to hit close to $4.00 a gallon by next summer and it might go higher!! Want gasoline prices to come down? We need to take some intelligent, united action. Phillip Hollsworth offered this good idea.

This makes MUCH MORE SENSE than the “don’t buy gas on a certain day” campaign that was going around last April or May! The oil companies just laughed at that because they knew we wouldn’t continue to hurt ourselves by refusing to buy gas. It was more of an inconvenience to us than it was a problem for them.

BUT, whoever thought of this idea, has come up with a plan that can really work. Please read on and join with us! By now you’re probably thinking gasoline priced at about $1.50 is super cheap. Me too! It is currently $2.79 for regular unleaded in my town. Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a gallon of gas is CHEAP at $1.50 – $1.75, we need to take aggressive action to teach them that BUYERS control the marketplace….. not sellers. With the price of gasoline going up more each day, we consumers need to take action. The only way we are going to see the price of gas come down is if we hit someone in the pocketbook by not purchasing their gas! And, we can do that WITHOUT hurting ourselves. How? Since we all rely on our cars, we can’t just stop buying gas. But we CAN have an impact on gas prices if we all act together to force a price war.

Here’s the idea:

For the rest of this year, DON’T purchase ANY gasoline from the two biggest companies (which now are one), EXXON and MOBIL. If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit.

But to have an impact, we need to reach literally millions of Exxon and Mobil gas buyers. It’s really simple to do! Now, don’t wimp out at this point…. keep reading and I’ll explain how simple it is to reach millions of people.

I am sending this note to 30 people. If each of us sends it to at least ten more (30 x 10 = 300) … and those 300 send it to at least ten more (300 x 10 = 3,000)…and so on, by the time the message reaches the sixth group of people, we will have reached over THREE MILLION consumers. If those three million get excited and pass this on to ten friends each, then 30 million people will have been contacted! If it goes one level further, you guessed it….. THREE HUNDRED MILLION PEOPLE!!!

Again, all you have to do is send this to 10 people. That’s all. (If you don’t understand how we can reach 300 million and all you have to do is send this to 10 people…. Well, let’s face it, you just aren’t a mathematician. But I am, so trust me on this one.)

How long would all that take? If each of us sends this e-mail out to ten more people within one day of receipt, all 300 MILLION people could conceivably be contacted within the next 8 days!!!

I’ll bet you didn’t think you and I had that much potential, did you?

Acting together we can make a difference. If this makes sense to you, please pass this message on. I suggest that we not buy from EXXON/MOBIL UNTIL THEY LOWER THEIR PRICES TO THE $1.30 RANGE AND KEEP THEM DOWN.

THIS CAN REALLY WORK.

So a Coca Cola executive got this economic idea from his engineer buddy who used to work at Halliburton. He must really know what he’s talking about since he worked at Halliburton, right? Here we have an example of False Authority Syndrome — the belief that a person’s expertise in one area gives that person automatic expertise in some other area. He’s an engineer at Halliburton! Yeah, but does that make him an expert in economics? To put it another way, do you go to your dentist for advice on your septic tank problems? Yeah, I didn’t think so.

I contend that this idea is not sound economics because it ignores the nature of supply and demand. The email continues by asking people to stop buying gas from ExxonMobil stations and buy it from others. What will this do? The email claims that if ExxonMobil is not selling any gas, it will be inclined to reduce prices, and if one company reduces its prices, the other companies would have to follow suit. IF 100% of all Americans bought their gas from non-ExxonMobil stations, what would be the result?

The obvious answer is that ExxonMobil stations would not sell any gas, but does that mean that they would take it in the shorts? No. The non-obvious answer is that other stations would experience an increased demand for their gas. So to increase their gas supplies, they would buy up the unsold gas at the ExxonMobil stations. Since this plan by a former Halliburton engineer suggests shifting purchase locations rather than reducing gas purchases, it will have no effect on the price of gas or ExxonMobil’s overall sales. But it will be successful in raising gas prices because of the shifted demand and extra handling of the gas. This is sounding more and more like a liberal idea because, as Quinn’s First Law states, liberalism always generates the exact opposite of its stated intent. This email offers a plan that purports to force gas prices down, but if carried out, it would actually make prices go up.

Supply and demand. These are the twin economic forces that drive a free economy. This proposal does nothing for demand other than shifting it from one store to another, and it will have no real effect on the evil corporate boogerheads at ExxonMobil. To change prices over time, we need either to reduce demand and/or increase supply.

Don’t like paying big bucks when you fill up your 17 MPG car? Perhaps you should consider buying a more fuel-efficient car that gets 30+ MPG, and you won’t be paying so much to fill up. How about setting up a carpool to get to work or the store? Either solution would reduce individual demands for gas. As for supply, we could do a lot to lower local prices if we did away with EPA-required local gas formulations and have one standard gas blend for the whole U.S. If that were the case, a demand increase in Chicago could be filled by bringing in extra gas from surrounding areas. As it is now, a spike in demand in one area cannot be filled by gas from another area because the EPA forbids it. Way to go, unelected bureaucratic boogerheads!

Speaking of demand, we still get about 17% of our oil from the Middle East. If we were to tap our own oil fields off-shore and in ANWR, we could reduce the amount we pull from them. Supplying more of our own oil would mean not providing capital to people who hate us and seek our destruction. Lenin once said, “The Capitalists will sell us the rope with which we will hang them.” But in the case of the Middle East, we are paying them for the rope to hang us.

In short (too late!), silly plans like the kind this email proposes will do nothing to help matters, and actually have the potential to make matters worse. The real solution is to decrease our demand for gas and increase our supply. Then we would see a drop in gas prices.

And please remember: if any email tells you to forward it on to others, don’t!

So Congressman Peter DeFazio wrote to me, but it’s not really that big of a deal. He didn’t write to me as much as he just took advantage of his free franking privileges to blast info out to the residents of his congressional district. And since he’s a freakin’ liberal, I wasn’t all that surprised to read some of the things he stands for. I’m going to focus on the first part of his short treatise on gas prices. The bolded text is his.

Out of Control Gas Prices Require Immediate Action

Gas prices are headed over $3 a gallon, and the administration has failed to offer an effective solution. Last year, Exxon Mobil reported the highest corporate profits in history–over $36 billion. That’s nearly $100 million a day. The company paid its CEO a $400 million retirement benefit. Fifty refineries have been closed in the past 15 years due to oil company mergers. And now the companies use refinery capacity as an excuse to drive up prices. OPEC continues to violate international trade agreements by colluding to restrict supply and drive up prices.

In response, I support legislation to impose a windfall profit tax on oil companies, take legal action against OPEC and other market manipulators, increase fuel efficiency standards, put a moratorium on oil industry mergers, and make gouging consumers a federal crime. I also support bipartisan legislation, H.R. 4409, to require a reduction of 2.5 million barrels a day in U.S. oil consumption within ten years. To reach this goal, the bill expands federal research into alternative fuels, provides incentives for American automakers to speed commercialization of more efficient and alternative fuel vehicles, provides farmers with support to grow crops for use as fuel, and increases tax incentives for consumers who purchase fuel-efficient vehicles.

Oh, where to start? I think the actual title is worth commenting on. It is obvious Rep. DeFazio thinks that prices should be controlled. But understanding the nature of the market means recognizing that prices are a function of supply and demand. Inasmuch as there are price controls, they come at the hands of a meddling government. So, are gas prices out of control? No, the current price of gas is a natural reaction to elevated oil costs, increased demands for gas as the summer vacation time arrives, and artificial limitations on supply thanks to government meddling.

“[T]he administration has failed to offer an effective solution.” But it’s not the administration’s responsibility to jump into the market. An effective reaction to the rise in oil prices is to increase the oil supply, and Congress could do this by allowing drilling in ANWR and off-shore. But Democrats in Congress, including Rep. DeFazio, have chosen to block that effective solution.

“Last year, Exxon Mobil reported the highest corporate profits in history–over $36 billion. That’s nearly $100 million a day. The company paid its CEO a $400 million retirement benefit.” This is just a blatant attempt to capitalize on people’s natural jealousy of others’ wealth. Is Exxon Mobil stealing people’s money? Not at all. Is there something wrong with how much money the company earned? Well, it’s obviously wrong in the eyes of Rep. DeFazio. But Warren Meyer of Coyote Blog does a good job of debunking this meme. I’ve posted below a great image from Meyer’s website that shows the comparison of profit margins for oil companies with other industries.

profit margins

You can see from the graphic that oil companies have a smaller overall profit margin than many other companies. Banks are making almost 20 cents from every dollar they process. Since they make almost 2.5 times the profit of oil companies, why are we not hearing people bemoaning Big Banks rather than whining about Big Oil? I believe the answer is that Big Oil makes a great scapegoat, and liberals and the media (but I repeat myself) enjoy beating up on Big Oil.

In the second paragraph, Rep. DeFazio puts forward his plans to destroy continue meddling with the oil industry. “I support legislation to impose a windfall profit tax on oil companies, take legal action against OPEC and other market manipulators, increase fuel efficiency standards, put a moratorium on oil industry mergers, and make gouging consumers a federal crime.” This is a regular smorgasbord of liberal ideas. I am glad the oil industry has made lots of money recently. This means they have money to search for and develop more sources of oil, eventually driving the price down. If the government steps in and takes away their profits, they are taking away the incentive for the oil companies to compete in the market. If the government took away any income you made above $50,000, how hard would you work once you had earned that much money? Human nature is such that people stop working when there is no reward, and taxing away windfall profits is the government’s way of taking the reward from a company that was in the right place at the right time.

But it’s the idea of the government making “price gouging” a felony that really bites me. My last article discussed price gouging. As long as no one is holding a gun to my head, then I am entering into a voluntary transaction with the store owner. How can there be gouging? “But people are taking advantage of a situation to make money!” Well, duh! The story of John Shepperson is a perfect example of the clash between free markets and government:

Shepperson and his family live in Kentucky. They watched news reports about Katrina and learned that people desperately needed things.

Shepperson thought he could help and make some money, too, so he bought 19 generators. He and his family then rented a U-Haul and drove 600 miles to an area of Mississippi that was left without power in the wake of the hurricane.

He offered to sell his generators for twice what he had paid for them, and people were eager to buy. Police confiscated his generators, though, and Shepperson was jailed for four days for price-gouging. His generators are still in police custody.

Who was forcing the people to buy the generators? If you said “nobody,” then march to the head of the class. Shepperson saw a need, a chance for profit, and he rushed to fill that need. That is the beauty of the free market — there are no board meetings or government bureaucrats sitting around deciding how materials and services will be allocated that day. Instead, the invisible hand of the free market inspired Shepperson to rush needed items to the area. But did you notice how the anti-gouging laws “helped” the people? The law was written with the well-intentioned goal of protecting the people, but the result was that the government deprived the people of the very goods that they were ready and willing to buy. Consequently, nobody benefitted from the generators that now sit unused in police custody in Mississippi. Quinn’s First Law in action again: “Liberalism always generates the exact opposite of its stated intent.”

And who exactly will define what gouging is? Why, the very same government that takes away generators from the people in the name of protecting them will be the entity that defines price gouging nationwide.

There is no way I could ever vote for Rep. Peter DeFazio. It’s clear from his mail that he just doesn’t grasp the nature of the free market, and that’s the wrong person to have in Washington D.C., messing with our economy.