Free market takes a beating at East Valley fuel pumps - East Valley Tribune: Business

Free market takes a beating at East Valley fuel pumps

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Posted: Sunday, August 24, 2003 3:15 am | Updated: 1:38 pm, Thu Oct 6, 2011.

Dale Bremmer is an economics professor who got first-hand experience in supply and demand and shortages during the gas crisis of 1973-74.

As a junior in high school, he worked at Reed Exxon on Priest Drive and Broadway Road in Tempe.

He recalls gas lines stretching for blocks through the surrounding neighborhood.

"We’d get gas and we’d pump until we ran out,'' he said. "For a while, we tried limiting it to odd numbered license plates one day, even numbers the next."

Now a professor at Rose-Hulman Institute of Technology, a private engineering college in Indiana, he has studied the oil industry for years.

The best way to ensure that we have enough gas at a reasonable price, Bremmer believes, is market forces.

During the past week, the idea of the free market has taken a bit of a beating in the marketplace of ideas — or at least the East Valley outlet of it.

Lines at the station and prices that rise a buck or more in two weeks tend to shake folks’ faith.

Bremmer says that while he advocates antigouging laws — charging $5 a gallon when everyone else is charging $2.50 — and has concerns about the consolidation in the oil industry, the free market is our best bet in the long haul.

The free market has done reasonably well in delivering. Before the energy crisis in the early 1970s, you could buy a gallon of regular gas really cheap — for around 33 cents. Adjusting for inflation, that would be the equivalent of $1.37 today.

Before this current spike, regular unleaded gas in downtown Mesa was retailing for $1.51 a gallon or around 37 cents in 1973 money.

Price ceilings would be the worst reaction, Bremmer says.

So far the governor, attorney general and state legislators aren’t proposing anything that radical — only restricting gouging in emergency situations.

But in the hour-plus gas lines, consumers are angry at not only the inconvenience but at the prices and the right of companies to charge so much.

I believe that overall consumers and companies benefit from the free market. But businesses should keep this in mind: The superiority of the free market is not a universally accepted truth.

For the free market to exist in a democratic society, it must be a popular concept. Consumers must feel they benefit from it.

And businesses would be wise to remember that when a short-term opportunity to jack up prices — such as a gas crunch — presents itself.

Just because you have a right to do something does not mean you should always exercise it.

For example, you have every right to dislike your boss' hair style and every right to express that opinion.

Still, I would advise against you walking into your supervisor's office and saying: "You know, dude, that comb-over ain’t fooling anyone."

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