With the price of a gallon of gas shooting up to nearly $2.50 in parts of the Midwest, and near-record highs in other parts of the country, desperate politicians have begun demanding “answers,” which really means identifying scapegoats to explain why gas has more than doubled in price in less than a year. The most convenient scapegoat is “Big Oil”—faceless oil companies said to be ripping off the public to line the pockets of tycoons.
Vice President Gore is leading this mantra. “It’s time to put our feet on the brakes of what may well be big oil’s price gouging,” Gore told an Iowa audience. Companies are making “enormous and unreasonable profits” through “oil gouging and price fixing,” he said.
He is hardly alone in pointing the finger. “It’s called greed,” stated Chicago Mayor Richard Daley. “They want to make more money. Gas prices went up because of oil companies. That is the only reason gas prices are going up.” House Minority Leader Dick Gephardt warned, “The spotlight needs to be put where it belongs—on oil companies that are profiting from these skyrocketing prices.”
So it’s worth asking, what do these folks in government really know about prices? What do they know about basic elements of supply and demand, and about the variables that go into establishing value? Prices are higher than they would like, so they yell “Gouging!” And as we’ve seen with farm prices, if they get lower than they would like, it’s a “crisis.”
What is striking about these politicians making hysterical claims about oil companies is that, almost uniformly, they have no real experience in the private sector. They have hardly any experience in the world of commerce, where the complicated business of setting prices and trying to appeal to consumers is hashed out daily.
Vice President Gore, for instance, has worked in the public sector virtually all of his adult life, serving in the army, the House of Representatives, the Senate, and now the Vice Presidency. The lone exception was a short stint as a reporter with the Nashville Tennessean—a post employed chiefly as a springboard for public office.
President Clinton believes there is “no economic explanation” for the rise in prices, and claims that federal anti-pollution mandates account for only two or three cents per gallon. He promised a Federal Trade Commission investigation into oil companies’ practices. But what can Clinton really know about prices? Nearly every dime he’s ever earned has come from some jurisdiction’s taxpayers—as president, as governor and attorney general of Arkansas, and as a professor at the University of Arkansas, a public institution. His limited “private sector” experience—working on political campaigns for big-government candidates—hardly qualifies him as an expert on supply and demand.
It’s like this on down the line. Energy Secretary Bill Richardson’s lengthy official biography displays nothing that indicates having worked even one minute of his life in the private sector. But this hasn’t stopped him from sternly claiming the gas-price increase “has not been explained” sufficiently by the oil industry.
Rep. Gephardt’s biography boasts a quarter-century career on the federal payroll, and notes that he entered politics immediately upon graduating from college. No mention of ever having worked a real job. Then there’s fellow Democratic Rep. Janice Schakowsky of Illinois, who blamed what she termed a Republican “effort to avoid pointing the finger of blame…at the big oil companies.” Does she have any real-world experience outside of her tenure in Congress and eight years as a state legislator? Not really. Serving as a Naderite professional “consumer advocate”—as she did for 20 years—hardly counts.
This trend is particularly alarming at the Environmental Protection Agency, whose arbitrary mandates on reformulated gasoline have helped inflate prices. Carol Browner’s bio notes that she has worked for the Florida House of Representatives, as an environmental aid to both Senators Lawton Chiles and Al Gore, as the chief environmental regulator for the state of Florida, and as an activist in Washington for Consumer Action. She, too, has stoked suspicions of price gouging.
The hubris with which these government careerists pontificate on prices, flaying legitimate corporate entities for having to deal with the unpleasant consequences of government bungling, strikes one as rather absurd. And to peruse their CVs is enough to make one think that much of this arrogance might be tempered by an honest day’s work— something few of these media hounds have ever experienced.
Max Schulz ([email protected]) is editor of CEI’s UpDate.