Fuel on the Fire

By: Colin Combs

It’s no secret that gas prices have been ridiculous. Everyone has been bemoaning them for quite a while now. Some understand this is a consequence of the state inflating the currency so the dollar buys less, while government burdens the gas industry with high taxes and regulations so that less people can afford to enter the industry. Others think the answer is that gas companies are simply evil incarnate and that the government should wave its magical wand to legislate and fix everything. The local government in Somerset, KY, which recently opened up a tax-funded municipal-run filling station, has given such an answer. Republican mayor Eddie Girdler championed this plan, declaring:

“We are one community that decided we’ve got backbone and we’re not going to allow the oil companies to dictate to us what we can and cannot do… We don’t care if we don’t sell a drop of gasoline. Our objective is to lower the price.”

So instead of addressing the root problem of why gas prices are high, the town has decided to simply tax its citizens to buy gas, and then to sell the gas it bought with the taxpayers’ money back to its citizens for a “cheaper” price than other private firms.

Even ignoring the problems of people being tricked into thinking their gas is cheaper simply because the taxes aren’t included on the sticker price, this endeavor is doomed to fail because the state can’t determine whether it’s making a profit, and usually doesn’t even care. Mayor Girdler does an excellent job demonstrating this fact when he says that he doesn’t care if they “sell a drop of gasoline”. What private business would ever express such nonsense?

Resources don’t simply fall from the sky every time the government passes a new law. If the state wants to produce more of something, be it gasoline or healthcare or roads or police services or anything else, it needs to draw those resources from other parts of the economy, keeping them from being used to make the things consumers most highly demand. And without any profit or loss test to be able to test whether the government should produce more or less of a good, it can only make these decisions arbitrarily! The government could always produce more of something if it dedicated more and more money to it, but where to stop? It has no way of telling!

This attempt at state-managed gasoline, just like all other forms of socialism, is doomed to fail because socialists can’t calculate.