Former Libertarian Party Presidential candidate Ron Paul (now a Republican Congressman from Texas) has developed a plan to lower the gas prices and a surprise to some is that it requires less government regulation than more.
Many Americans understandably are upset with the sharp spike in gas prices since Hurricane Katrina hit the gulf coast in August, and are concerned by reports of oil company profits. But we must understand that high oil prices are not the result of an unregulated free market. On the contrary, the oil industry is among the most regulated and most subsidized of U.S. industries. Perhaps we need to ask ourselves whether too much government involvement in the oil markets, rather than too little regulation, has kept the supply of refined gasoline artificially low.
Consider Marathon Oil, which operates a refinery in Texas City. Marathon recently announced the construction of new refinery that will bring several hundred thousand barrels of oil online every day- which is exactly what the nation needs. But building a new refinery is a daunting task that requires billions of dollars in capital investment. The process of obtaining federal permits alone can take several years. As a result, we won’t see a drop of refined gasoline from the new Marathon facility until 2009.
Federal subsidies and regulations are largely responsible for limiting the supply of refined gasoline in this country. The demand for gasoline has risen dramatically in America due to population growth in recent decades, but virtually no new refining capacity has been added. Basic economics tells us that rising demand and a fixed supply will lead to higher prices. No amount of congressional grandstanding about price gouging will change this economic reality. We must increase domestic exploration, drilling, and refining if we hope to maintain reasonable gas prices. We need more competition, which means we need less government.
It would lower the gas prices almost twenty cents a gallon and maybe much more. You can read the full text of the Bill here.