Gasoline, like water and electricity, is a product critical to our lives. Gasoline fuels the vehicles that transport us and our goods in our cities, state and the nation.
So when the price of gasoline increases significantly, as has occurred recently, it dramatically and negatively impacts the nation's economy as the cost of travel and goods increase accordingly.
Although the Great Recession is supposed to be over (at least according to economists), the recovery has been very slow. A clear reason the economy isn't gaining traction is the weight of gasoline expenses on the American consumer.
This week the U.S. Senate is considering legislation to repeal $2 billion in tax breaks for the five major oil companies. Why, senators ask, should U.S. taxpayers subsidize oil companies when the oil refineries they own are reporting record profits?
It's a reasonable question. And while doing away with the tax breaks might be good public policy, it is unlikely to help reduce the price of gasoline.
Tougher action is needed. Although we generally favor the free market dictating prices, we believe some sort of government oversight or regulation could soon be justified in this case.
Perhaps the gasoline from the oil refineries could be regulated like electricity. In order to raise prices, the oil companies would have to seek permission from a government commission.
The commission would take into consideration market conditions such as the cost of oil, but could also make sure the consumer isn't being gouged.
U.S. consumers are clearly being ripped off right now.
Steve Everly of the Kansas City Star reported this week the cost of oil is not the driving force that has put the price of a gallon of gasoline above $4 a gallon.
"Even though U.S. gasoline use is declining, refiners have kept U.S. stockpiles below average by curbing production and exporting more gasoline," Everly wrote. "That has kept prices up -- and doubled oil refinery profits. Refineries are on track to reap their best profits in years."
The big oil companies and the refineries they own are an oligopoly, a market dominated by a small amount of sellers. It's easy for these oil giants to tinker with the flow of gasoline and drive up their profits.
Refineries are exporting more gasoline, especially to Mexico and Latin America, Everly reported.
"In February, the most recent month for which figures were available, the U.S. exported 400,000 barrels of gasoline a day, or about 5 percent of U.S. demand. U.S. exports are at their highest levels since the information started being collected in 1945," he wrote.
If the major oil companies can't keep prices -- and their profits -- at a reasonable level they are inviting government oversight and regulation.