San Diego Housing Market News and Analysis
$4 gas, free market, tax burden question
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Submitted by Dukehorn on February 28, 2008 - 1:49pm
I'm a tech lawyer so my econ background is pretty mediocre.
President Bush today said he hadn't heard about the predictions for $4 gas, but that the proposed 18 billion dollar tax increase on the oil industries from Congress was going to bump the price up.
From a free market perspective, does the tax increase really matter? The gas companies turned in another quarter of record profits so I'm trying to figure out the supply and demand question for something that literally everyone needs (due to the sad state of public transportation in this country).
Since this is a market area where the consumers have limited options and therefore will pay whatever price is being charge (to a certain extent), the only possibility is if one of the companies decides to undercut the others price-wise, but what's the incentive to do so? This isn't a luxury item so in essence the market is an oligopoly (isn't it)?
De-regulation is great in industries where you have to compete for consumers but that really isn't the oil industry.
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