As Andrew Peterson sang, “Lost my luggage out in Kalamazoo” … well, that really has nothing to do with this.
I was talking with someone the other day about the frustrations in the rise of gas prices over time, and in all my efforts to try to explain free market economics, they still were unable to accept the WHY prices rise and fall simply because they didn’t LIKE the price they were being offered.
Let’s take a quick look back in time. When automobiles first arrived on the scene, there weren’t that many of them. Demand for gasoline wasn’t that great. Contrast that with supply being higher than demand, and in any free market economics society, that will cause the price of anything (even gasoline) to be low.
Move forward to the 50’s – 60’s. My dad grew up in this era. He grew up on a farm in southwest Missouri in a family of two parents and six kids. Their mode of transportation consisted of a single family vehicle (think Griswold Family Truckster) and a couple of farm trucks. Still, with the rest of the country now starting to travel all over the place, individual family units still didn’t have many multiple vehicles traveling simultaneously, grandma and grandpa weren’t typically cruising around town in their car while Junior and his buddies were all in their own cars; therefore, gasoline was still at a free market low cost.
When I started driving in 1993, I could fill up for as low as 67 or so cents a gallon. Now, move forward to today’s culture. I have a car. My wife has a car. My parents each have a car. My sister has her car. Each of my grandparents have their own cars. A majority of family units now have a vehicle for EACH person of driving age.
Simply put, NOW you see great-grandma and grandpa driving around. Grandma and grandpa driving. Mom and dad driving. Junior and Junior-ette driving … and each could be driving their own vehicles! This, in turn, is very obvious to me that demand for gasoline has had to go through the roof … AND (not to get political) our own governmental controls combined with OPEC production regulations have not kept up with the increasing demand for gasoline – a.k.a. supply is less than demand … way, less.
In free market economic, when demand out paces supply, price must go up. I don’t like paying higher prices. You don’t like paying higher prices. We could go back to trying out price controls, but that’s what happened in the 70’s with gas shortages and long lines at the pumps … oh, that’s also the kind of controlling nature that crippled the former U.S.S.R. – not sure we should go that route.
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