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John Stossel
John Stossel
27 Aug 2014
Green Monster

Thanks, Environmental Protection Agency! You've required sewage treatment plants, catalytic converters on … Read More.

20 Aug 2014
Policing a Riot

Libertarians warned for years that government is force, that government always grows and that America's … Read More.

13 Aug 2014
Mindless Drones

Drones — unmanned flying machines — will soon fill our skies. They conjure up fears, especially … Read More.

Gas Myths

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Plan to drive more this summer? Annoyed by the price of gas? Complaining that oil companies rip you off?

I say, shut up. Even if gas costs $4 per gallon, we should thank Big Oil. Think what they have to do to bring us gas.

Oil must be sucked out of the ground, sometimes from war zones or deep beneath oceans. The drills now bend and dig sideways through as much as 7 miles of earth. What they discover must be pumped through billion-dollar pipelines and often put in monstrously expensive tankers to ship across the ocean.

Then it's refined into several types of gasoline, transported in trucks that cost hundreds of thousands of dollars. Finally, your local gas station must spend a fortune on safety devices to make sure we don't blow ourselves up while filling the tank.

And it still costs less per ounce than the bottled water sold at gas stations. If government sold gas, it would cost $40 per gallon. And there would be shortages!

Another myth: Big Oil makes "excess" profit. Nonsense. The oil business is fiercely competitive. If one company charges a penny too much, other companies steal its business. Apple's profit margin is about 24 percent. McDonald's makes 20 percent. Oil companies make half that.

Per gallon, ExxonMobil makes about 7 cents. Governments, by contrast, grab about 27 cents per gallon. That's the average gas tax. If anyone takes too much, it's government.

President Obama says, "Gas costs too much." So he announced: "We've put in place the toughest fuel economy standards in history. Over the life of a new car, the average family will save more than $8,000 at the pump."

Sounds good. But the magic of fuel economy standards is another myth.

Susan Dudley, who runs the Regulatory Studies Center at George Washington University, points out that many car buyers care more about safety, style, power, etc. than mileage.

"The problem with the government's rule is that they ignore all those other preferences ... assuming that the only thing we value is fuel economy."

Fuel economy sounds appealing when it's presented as something created at no cost.

But car dealers say it will make cars cost $3,000 more.

Also, as James Taylor, an energy expert at the Heartland Institute, pointed out to me, fuel-economy regulations kill.

"In order to make cars more fuel-efficient, auto manufacturers make them smaller — using lighter materials, they're less crash-worthy ... We're seeing thousands of people dying on the roads that shouldn't be."

You'd think automakers would strongly oppose these regulations — but if so, why, when President Obama unveiled the regulations, did the heads of 13 car companies shake Obama's hand and smile?

"Even if it is a $60 billion cost to them," says Dudley, "if everyone has to do it, they can pass it on to consumers."

In other words, normally companies compete to do things more efficiently than rivals, in order to charge lower prices and get the lion's share of customers. But there's no need to worry about jacking up your prices when your rivals must do so, too. Regulation makes companies lazier, not more efficient.

Republicans at least talk about deregulation. But the "regulation-killing Republican" is another myth. Despite being labeled a deregulator, George W. Bush hired 90,000 new regulators. Dudley, who was their overseer, now says, "The pressure to regulate is intense."

Almost no one seems to speak up for a true free market in energy, with competition, innovation and unfettered consumer choice. People say regulation is needed to counter industry "greed."

But if anyone's greedy here, it's government — and unlike oil companies, government doesn't have to work hard and compete to give you good service at the lowest possible price. Government just sits there, telling companies to charge less, telling car companies to make smaller and more dangerous cars, mandating and subsidizing alternative fuels like ethanol — and then telling us that we benefit from the politicians' efforts.

The truth: We rarely benefit.

John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "No They Can't: Why Government Fails, but Individuals Succeed." To find out more about John Stossel, visit his site at <a href="http://www.johnstossel.com" <http://www.johnstossel.com>>johnstossel.com</a>. To read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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Comments

3 Comments | Post Comment
Mr stossel, your asking the wrong questions about the cost of gas and the price of oil. Ask yourself why did the Air Force test fuel from coal for the government and then have the government kill the project by forcing the cost of coal fuel above the cost of gas? this conuntry is setting on over 450 years worth of coal, and it can produce a cheap cas alternative. But the EPA made the cost of producation too high to make it cost effective. Coal fule works in our air plains and cars (the truck that delivered the coal fule ran great on it for several months).
Comment: #1
Posted by: Phillip Smith
Tue May 28, 2013 10:57 AM
Don't tell me what a bargain gasoline is . I have no choice but to drive. Unlike you the taxpayers are not subsidizong my travel I don't have the option of a train or bus paid for n part by gasoline taxes. It is wrong to compare gallon of gas to bottled water. Instead compare it to the gallon of water I get at the grocery store. It, too, has to be dug up, put in a pipiline transported to a refinery. Then at the retail level it it purified with ozone and UV light and filtered by reverse osmosis. My cost? Twenty five cents a gallon placed in my container. And if you think gas is still a bargain compare it to a bottle of Glenlivet scotch with sells for nearly four dollars an ounce! Gasoline is not a bargain no matter what curly-haired commentators from a big city try to tell me. Gasoline prices are an enormous anchor dragging down our economy.
Comment: #2
Posted by: Gary Stewart
Tue Jun 4, 2013 2:23 AM
please send money for my account in nig my account number 0108755829 g.t. bank nig name.chukwujekwu nnebe thank
Comment: #3
Posted by: chukwujekwu nnebe
Thu Aug 1, 2013 9:22 AM
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