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Ben Stein How Not to Ruin Your Life

Ben Stein, How Not to Ruin Your Life

Playing Politics at the Pump

by Ben Stein

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Excellent (775 Ratings)
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Posted on Thursday, May 24, 2007, 12:00AM

Back when I was a student at Parkside Elementary School in Silver Spring, Md., in the mid-1950s, there used to be a day each year when the class went to Annapolis, the state capital.

We would sit in the legislators' seats and pretend to be state assemblymen. Then we would sit in the state supreme court justices' seats and pretend to be jurists. We would even sit in the governor's seat (I think his name was McKeldin) and pretend to be governor.

But we weren't really legislators or justices or governors. We were just little fourth or fifth graders sitting in high officials' chairs. We didn't really have any idea of how to govern a state or judge a case or pass a sensible law. We were just kids.

Playing Government

Time passed, as it so cruelly does. I went to work at the White House for presidents Nixon and Ford. I worked with cabinet members and with the president. I occasionally (OK, rarely) sat in on cabinet meetings. I got briefings from high officials.

Here's a small part of what I learned: None of those big names was especially brilliant. None of them had any super-genius insights or strategies. They weren't Thomas Jefferson or James Madison -- they were just ordinary people with the same limitations all people have.

It occurred to me as I worked with those world-famous names that it was Annapolis Day back at Parkside Elementary all over again. We were just big kids in fancy suits sitting in the chairs of famous men and women, pretending we were smart and knew how to solve intractable problems.

But we didn't, and the problems persisted. If any got solved, it was usually just due to the passage of time or luck or circumstance. Or maybe it was the daily adjustment to change of hundreds of millions of Americans that solved the problems. It generally wasn't the hand of government regulation or the non-existent genius of the bureaucrats.

A Rush to Punish

All this comes to mind because I read that something called "the Stupak bill" just passed in Congress. This bill, named for a representative from the great state of Michigan, basically gives us a socialized energy industry. (As of this writing, President Bush has threatened to veto the bill.)

Of course the bill doesn't come right out and say that, because Americans are wary of socialism. But the Stupak bill allows the Federal Trade Commission (FTC) to issue findings of price gouging against energy companies based on the slenderest of assumptions rather than real evidence, leading to severe punishment for the companies.

This regulation could be triggered by actions that are basic to the free market -- for instance, when an oil company raises prices because there's a shortage of oil due to a revolution in Nigeria that shuts down production in the Niger Delta, or a hurricane that closes refineries in Louisiana.

In the most elemental terms, then, the Stupak bill punishes oil companies when the free market is working as it should, allocating supply by means of the price system.

Suffering the Consequences

When I say punishing the oil companies, I mean that the Stupak bill allows compulsory lowering of fuel prices. That will mean service stations running out of gas, long lines at the pump, and people unable to get to work or school or the hospital.

Who will really be punished when the bill is enacted? Not the top dogs at the energy companies -- they'll continue to be well paid. No, the drivers and homeowners of America who can't get gasoline and heating oil will be the ones to suffer. And ordinary investors who own stock in oil companies are also going to be punished. But everyone will suffer from indulging the fantasy that waving a government magic wand can solve real problems.

The FTC already had the authority to investigate price gougers based on real facts, not just prejudices. The Stupak bill adds nothing to that power. The Justice Department already had the power to investigate price fixing and collusion to violate antitrust laws. Both the FTC and Justice have the authority to go to court to enjoin and punish such acts -- so long as they're genuine.

There Are Always Alternatives

The Stupak bill is just a way for an eager Congressman to grab the spotlight and act as if he's found a better way to run the economy than the free market. He's just a big kid with a fancy chair in the capitol -- but he's dangerous, as little kids with power tend to be.

Mind you, I dislike high gasoline prices, too. I hate that so much of our money goes to petro-states. But socialized energy isn't the way out of trouble -- it's the way into trouble, a la the gas lines and "no gas today" signs of the early '70s. It's frightening how little we human beings learn from our mistakes.

So what's the way out for us? Drive less often. Buy a smaller car. Don't consider burning gasoline via aimless cruising as a legitimate form of amusement. Open the windows and turn off the air conditioner. Walk instead of drive. Stay home and read a book.

But don't socialize Big Oil -- that's a guaranteed disaster.

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186 Comments

Showing comments 6-35 of 186<< PreviousNext >>
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  • First L - Monday, June 11, 2007, 11:20AM ET  Report Abuse

    • Overall: 5/5

    We must remember that government does not run business well. Gopher

  • Yahoo! Finance User - Sunday, June 10, 2007, 11:30AM ET  Report Abuse

    • Overall: 5/5

    Ben is always right but OPEC can have meetings and come up with a price they want for oil and cut supply, that's where this all started. They wanted around $30 a barrel. We need to stop building gas stations, the stations in my area are rarely full of customers and each gas station holds thousands of gallons of gasoline just sitting there for days while somebody says supplies are low. After katrina, some gas stations closed for a while because of $3 gas but they are all open now. I'm sure those temporary closures helped cut demand. There are two, three, four gas stations within a block or two. It's just like your gas tank, you fill it today but that gas will last you days, sometimes. And if that's so you've just created more demand. And just to add, prices at the pump are up but the price of other goods is exploding. Some items are 25-50% HIGHER, is your raise that big?

  • Yahoo! Finance User - Saturday, June 9, 2007, 2:06AM ET  Report Abuse

    • Overall: 5/5

    Very well said Mr. Stein.It just drives the Democrats nuts that someone can make a little money (including the stockholders) of these oil companies. I have friends and relatives that are absolutly rabid with conservitives. Now they know how I felt about Bill Clinton. I firmly believe that private enterprise must prevail or what would we become? I certainly don't agree with everything the Republicans are doing but compared to the left there isn't any comparison. The current group of Democrats running for President is quite scary. I wish you well and keep writing the books. DMH

  • w - Friday, June 8, 2007, 9:42AM ET  Report Abuse

    • Overall: 1/5

    I like Ben. He's a funny guy. He should get a career in comedy.

  • TomS - Thursday, June 7, 2007, 2:14PM ET  Report Abuse

    • Overall: 4/5

    Frank & seenu, You boys go have another glass of kommie kool-aid and let the free-thinking grown-ups handle this, OK?

  • frank - Thursday, June 7, 2007, 10:36AM ET  Report Abuse

    • Overall: 1/5

    “Stupak bill allows compulsory lowering of fuel prices. [When Big Oil is artificially increasing the price] That will mean service stations running out of gas, long lines at the pump, and people unable to get to work or school or the hospital.” American’s buy the same amount of gas every week whether the price is real or “jacked up”. So why would we run out of gas??? I guess Ben thinks we will start hording gas in milk bottles once the Gov. insures a fair price for gas. Apparently Ben is not especially brilliant. Just a Big Oil shill. I wish I could give no stars.

  • Srinivas C - Thursday, June 7, 2007, 9:20AM ET  Report Abuse

    • Overall: 1/5

    Come on, please dont be a pimp for the big oil companies. Left to the "free market", it will take the deaths of a few hundred customers before a toothpaste stained with illegal chemicals is withdrawn from the market. The big oil mafia can shutdown plants, hide inventory and claim malfunction, do whatever it takes to keep the supply demand in line for their profits. And you want us to believe the same folks who ran Enron to the ground and have swindled millions of employees of their retirement plans? No, please dont pimp for the big oil. They have more than their share of pimps in the current administration.

  • lora - Thursday, June 7, 2007, 8:03AM ET  Report Abuse

    • Overall: 5/5

    Exactly what i have been telling my wife for months , but it gets me nowhere. This country needs to wake up.

  • Yahoo! Finance User - Monday, June 4, 2007, 1:49PM ET  Report Abuse

    • Overall: 5/5

    for those of you saying that the government has a right to regulate corporations based on it's own judgement and that the above said is not socialism, buy a dictionary, socialism - the theory of public collective (government) ownership OR CONTROL of the basic means of production, distribution, and exchange, with the avowed aim of operating for use rather than profit. So those of you complaining about oil companies making a profit should buy stock in those companies, or work for those companies, or explore an oil field yourself. As for the rest of you socialists . . . maybe you've forgotten what freedom is

  • On - Monday, June 4, 2007, 11:21AM ET  Report Abuse

    • Overall: 5/5

    As much as I dislike the high gas prices, punishing big oil won't do a thing to solve the problem. If they pass on costs to the consumer, we lose. Either way, we're going to pay. However, the incentive of high oil costs is to move to alternative energy sources. That is the sort of push we need, not some invisible hand trying to do what's right by our politicians. If only our government worked on something other than groupthink and mass paranoia...

  • Dan - Monday, June 4, 2007, 1:34AM ET  Report Abuse

    • Overall: 2/5

    I am wondering when we have to begin to subsidize peoples gas use. Those on minimum wage may not be able to afford to buy gas to get to work. The downside to free market economy means those without means get abused by the free market by those that have means. Or said another way conservation is for those that can not afford the high price of gas. I will wager that no one that leaves a comment here on yahoo that talks about conservation will do it because we all have the means to buy gas at these prices.

  • Yahoo! Finance User - Sunday, June 3, 2007, 6:12PM ET  Report Abuse

    • Overall: 1/5

    Typical Stein nonsense, defending a greedy economic system, capitalism, that even Teddy Roosevelt knew needed close scrutiny most of the time. Hurray for socialism!

  • Ben Dover - Sunday, June 3, 2007, 8:38AM ET  Report Abuse

    • Overall: 3/5

    The article is on the right track, but hardly a new theme. It seems that I have read this exact or similar topic in earlier editions. The follow up article should be about how many of you 5 star raters voted for empty suits in the last election and how many of you simply don't vote. Of course, nobody wants gas lines, shortages, and myopic legislation. Yet...maybe four dollar gas would get the creative ideas going instead of the same old carping.

  • Yahoo! Finance User - Sunday, June 3, 2007, 1:48AM ET  Report Abuse

    • Overall: 5/5

    more articles like this one are welcome, Ben!

  • Yahoo! Finance User - Friday, June 1, 2007, 6:13PM ET  Report Abuse

    • Overall: 5/5

    It can't be said enough times: the government makes more from each gallon of gas than the oil company that brought it to you!

  • cece65 - Friday, June 1, 2007, 12:02PM ET  Report Abuse

    • Overall: 5/5

    I think MR. Stein is a genius, and has a genuine heart. He would have my vote if he were to run for the presidency.

  • Yahoo! Finance User - Thursday, May 31, 2007, 1:58PM ET  Report Abuse

    • Overall: 5/5

    Ben nails it again. Nice job.

  • Beth - Thursday, May 31, 2007, 11:02AM ET  Report Abuse

    • Overall: 5/5

    I wish you were still in DC, helping people make decisions by explaining things to them.

  • Christian - Thursday, May 31, 2007, 8:46AM ET  Report Abuse

    • Overall: 5/5

    I think its pathetic that people below equate price gouging to increased oil profits. We choose to pay for the gas, we choose to not car pool, we choose not to buy fuel effecient cars, we choose not to take mass transit and we choose the elected officials that seemed to only work for themselves. It's about time that Americans started living in the bed that they made and not look for the quick fix.

  • Eric - Thursday, May 31, 2007, 5:08AM ET  Report Abuse

    • Overall: 5/5

    I thought the article was right on the money. Anytime the price of gas goes up, Big Oil is always the culprit, and Congress tries to reassure the public that it has a solution. The industry is imperfectly competitive, but it's still subject to supply and demand trends. If the public wants lower gas prices, then Congress should ease regulations discouraging the construction of new refineries.

  • MIKE - Thursday, May 31, 2007, 2:09AM ET  Report Abuse

    • Overall: 5/5

    The free market economy has allowed most Americans a level of wealth undreamed of in the history of Mankind. It is too bad that so many of our own citizens fear freeedom. Thank you, Ben, for continuing to fight the good fight.

  • David - Thursday, May 31, 2007, 12:26AM ET  Report Abuse

    • Overall: 5/5

    We (American Citizens) need leaders that have enough courage to suggest energy conservation to those who elected them and consume much of the energy. Morever, we need leaders who we can trust to allocate the taxes earned from the oil company profits toward education and venture capital to explore energy conservation and new energy sources.

  • Conrad K - Wednesday, May 30, 2007, 8:22PM ET  Report Abuse

    • Overall: 5/5

    Would that Mr. Stein had stayed in one of those high official chairs in Washington. We might have avoided some of the government-induced economic disasters that have plagued us (or, "legislated corporate responsibility" as another reader described it. Beware! Another socialistic euphemism!),

  • Yahoo! Finance User - Wednesday, May 30, 2007, 8:15PM ET  Report Abuse

    • Overall: 4/5

    Pre Tax Profit for Exxon, for example is about 20%. The Government will extract their due from that. Compare that to CocaCola. Their Pre Tax Profit is about 28%. Gas is not as profitable as Soft Drinks and requires significantly more risk and investment in equipment. Stein is Correct. Many of the people in DC are not very bright. But look at the intellegence of those who elected them.

  • Yahoo! Finance User - Wednesday, May 30, 2007, 8:05PM ET  Report Abuse

    • Overall: 5/5

    well put ben! just another example of the free lunch economics that prevails in the congress

  • Matthew - Wednesday, May 30, 2007, 7:43PM ET  Report Abuse

    • Overall: 1/5

    First, I have to say: It makes no sense to be using a Personal Finances column to launch into a diatribe about economic policy regarding Big Oil. Market forces will not lower current prices. With today's huge windfall profits, Big Oil could easily be exploring formerly unprofitable reserves and building new refineries to match increased demand -- but they aren't. Why spend money to decrease profits? I say tax windfall profits at high rates, with credits to reinvest profits in exploration, increasing domestic refinery capacity, and alternative fuel research. Mr. Stein might still cry "Socialist" (since apparently he uses the word to describe any measure of legislated corporate responsibility), but it would have an incredible effect on our ability to be self sufficient with regards to energy.

  • Steve - Wednesday, May 30, 2007, 7:26PM ET  Report Abuse

    • Overall: 5/5

    I always enjoy Ben's column. But he is certainly at his most brilliant we he discusses government. I think both parties (but most of all dems) are under the illussion that politicians make a difference. People make the difference. I enjoy politics and spend a not-so-small amount of time following politics and stumping for candidates. But the most honest statement is that "he who governs least, governs best". And as a employee of an oil company let me promise you we have next to no control over prices. If we did, please explain what we were doing when prices were so low for much of the 90's? If we do control prices, we suck at it. The largest domestic oil company accounts for about 3% of all oil volume. Try controlling price when you have such little volume. You can't. Besides I ahve little sympathy for people who buy huge cars and then complain about prices. I drive an SUV but I also have a 1.5 mile commute. When we leave town we take my wifes car we gets 30 mpg. Just be sensible. Then you can laugh at all the fools driving Hummers. Thanks Ben!

  • Yahoo! Finance User - Wednesday, May 30, 2007, 7:20PM ET  Report Abuse

    • Overall: 5/5

    While I agree with Mr. Stein, there is still culpability on the industry's part. Let them return all of the dollars that have come as additional bottom line revenues through the tax breaks from the favorable legislation that was passed a couple of years ago, or at least use that money to begin construction of more efficient refineries. I too find it somewhat unbelievable that each year as we approach the summer driving season that so many refineries have to close because they need to have major upgrades. It just doesn't pass the sniff test folks!

  • Mark - Wednesday, May 30, 2007, 7:17PM ET  Report Abuse

    • Overall: 5/5

    Great article. Oil companies invest in huge projects decades into the future while oil fluctuates in price daily. Perhaps Congress and all Americans should take the same approach. Conserve, innovate and look to the future instread of complaining about issues and playing the blame game.

  • Suteebu - Wednesday, May 30, 2007, 6:47PM ET  Report Abuse

    • Overall: 5/5

    Conservation is the key.

Showing comments 6-35 of 186<< PreviousNext >>
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