The High Price of Oil—and of Demagoguery

Research Summary

q       High price of gasoline has been one of the grave concerns in developed countries that are forced to consume massive quantities of oil for their daily energy needs. Though the concerns are alarming, often, the laws of the states seem helpless in keeping a check over the prices.

q       The author notes that in trying to regulate the oil price, most states are not able to properly define at what extent price rise becomes price gouging.

q       Noting the differences that exist between the policies of different states in approaching the issue, the article tries to define price rise, and the concrete ways of checking price rise.

q       To elaborate the concept, the author takes the support of the economic theory that price rise is rather a complex issue depending upon several issues including supply and demand.

q       Getting to the nuclei of the problem, the article highlights that during emergency periods of less supply and high demand, the investors thrive on more profits.

q       Looking from different angles, price rise is caused due to less supply and more demand. Therefore, any remedy to this problem can be wrought only by working on both the ends namely increasing the production and reducing the consumption.

q       Drawing inferences from earlier occasions, the author says that every time an investigation is demanded, invariably the recommendations pertain to supply and demand.

q       Commenting on the huge cost involved in the production of oil, the author believes that when compared to this, the salaries paid to employees and the profit made by the companies cannot be valid reasons for price rise.

q       The author makes a significant observation that the price controls during earlier occasions only resulted in shortage of supply causing motorists to wait in long lines at filling stations and no better result could ensue.

q       The author’s approach to the issue of price rise in the article is insightful and the article calls for a systematic and strategic approach on the part of the government to solve the problem rather than loading blames on other parties and trying to evade the scene.

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