May 22, 2022 - 9:00 pm
Democrats have bungled the economy so badly that they’re now looking to the 1970s for inspiration.
On Thursday, the House passed a bill that would give the president the authority to limit gasoline prices. Most Democrats voted for the measure, including Nevada’s three Democratic members. The bill is unlikely to advance in the Senate.
The political rationale behind the legislation is straightforward. Price controls are an effort by Democrats to deflect blame from the consequences of their own policies. As a bonus, they get to demagogue about “greedy” corporations.
The left has long attacked fossil fuels. That led President Joe Biden to push a host of new restrictions and limitations on the companies that produce them. On the campaign trail, he vowed to ban oil and gas drilling. Earlier this month, the White House canceled plans to hold offshore oil and gas lease sales in Alaska and the Gulf of Mexico.
This hostility has contributed to falling investment by energy producers. That leads to higher prices, as even a high school economics student could have predicted. Domestic crude oil production declined the year Biden took office. Demand is up with the easing of coronavirus restrictions and the return to normal life. Global factors, such as Russia’s invasion of Ukraine, haven’t helped. But gasoline prices were increasing long before that war started, and the public is ticked.
“My frustration is at an all-time high that we are talking to OPEC, Iran and Venezuela to increase oil output, while we are at the same time blocking increased energy production at home,” Sen. Joe Manchin, D-W.Va., said Thursday.
For the first time, the average price of gasoline exceeds $4 a gallon in every state. That sounds like a dream in Nevada, where motorists pay well more than $5 a gallon.
The Federal Reserve Bank of Dallas this month released an assessment of soaring gasoline prices. It found the price of “crude oil accounts for 59 percent of the cost of gasoline.” But “oil companies play an extremely limited role in how retail gasoline prices are set.” The report suggests retail operators and increasing demand for the summer could be what’s keeping prices high, even when the price of oil takes a temporary dip.
America has tried the Democratic prescription before. In the 1970s, the government imposed price controls on gasoline. Long lines at the pump and fuel shortages soon followed. Speaker Nancy Pelosi no doubt remembers firsthand.
What happened in the 1970s offers a vivid example of how the government can’t regulate away supply and demand. It can however, introduce additional and more destructive distortions into the market.