Government, not the oil industry, is the problem

Well today was the facebook led "Gas strike." People have good reason to be upset about the rising prices of gas, but to take it out on the oil companies is to be misguided. Considering the innovation of the companies, the convenience they bring, and until recently the cheaper than milk prices, to be angry at the oil industry is simply wrong.

The constant regulation and persecution by the government is the problem. Instead of simply demanding the oil companies to drop prices, (which would result in shortages) we should demand regulation to be dropped. Perhaps my economics professor puts it best in his book "Economic Principles and Issues." He writes:

"Sometimes the government acts like parents in order to change behavior that is deemed unacceptable.

"According to Obama-and others that supported this idea-the oil companies made too much profit in 2007 and 2008 from the historic increase in crude oil prices. These critics charged that rather than earning increasing profits by providing better and more reliable petroleum-based products, the oil companies were simply raking in billions of dollars in extra cash as a result of nothing more than rising prices.

"Exxon-Mobile, for example, reported net after-tax earnings of $40.6 billion in 2007, which amounted to $1,400 in profits every second.

"What is not often mentioned, however, is the fact that over the past five years the oil industry's net income was 5.7 cents per dollar of revenue (translation - out of every dollar earned, 94.3 cents went to operating costs), while the average for all other industries was 5.5 cents.

"The reason oil companies have been cited for 'excessive greed' is simple. First, since we have all been impacted by rapidly rising gasoline prices, we are more likely to get angry with the companies who sell us gasoline. Politicians therefore can gain votes by turning our anger into political persecution of those companies without mentioning the fact that Exxon-Mobile paid $30 billion in corporate taxes in 2007.

"Nevertheless, as he campaigned in 2008, Barack Obama promised to tax the profits of oil companies at a higher level and send part of the money to the American people."*

Perhaps if we quit voluntarily leaving our fate up to corrupt organizations such as OPEC, and started drilling in shallow water, Alaska, or North Dakota, prices would magically go down. The real "gas strike" wasn't executed today by a half million disgruntled facebook users. It's been led for years by our very own government, and we can see how effective that has been.

* Robinson, Steve. (2010). Economic Principles and Issues. Dubuque, IA. Kendall Hunt Publishing Company. pg 147.