The Democrats and even the Republicans have taken up today’s latest cause celeb: bashing the oil companies. These leftists blame the oil companies for the latest price increases. Why do they do this? Because it is convenient and it is far easier to blame a visible target (ie, the Oil Companies) than to explain to the uneducated masses the reality about gas prices or economic in general.

Gas prices are high for two reasons: decreased supply and increased demand. Not only is the US economy growing but several up and coming economies are growing at record rates, particularly India and China, and thus so too has their demand for oil. This, as Americans continue to drive more in larger vehicles (which is their prerogative). Supply is also limited, not only is the US still reeling from Gulf hurricane damage but refining capacity has not increased in a generation, thus causing a bottle neck in the petroleum supply chain.

These are the principle causes for the current rise in gas prices. The US therefore in order to lower prices and reduce dependency should explore numerous avenues to alleviate this growing problem. Several options present themselves including increasing domestic production, boosting fuel efficiency through readily available technology, such as hybrids and increased development of petroleum alternatives. One thing that will not work is a tax on so-called windfall profits or a Standard Oil style breakup of the nation’s oil companies, whose profit margins are eclipsed by several other industries including software and technology companies, the banking industry and the entertainment industry.

Furthermore there is no such thing as gouging. The free market provides a ready clamp on companies who raise their prices substantially. A company cannot raises prices without a substantial customer fallout and even if that were not the case, businesses and individuals should be free to charge what they feel the market will bare, it is not the duty or the responsibility of the state to intercede on behalf of the ignorant and uneducated.
http://www.usatoday.com/money/world/2006-04-30-euro-gas-usat_x.htm