Many of you have noticed that gas prices have inched up to $4.00 a gallon. This increase in gas prices may hamper the nascent economic recovery that is taking place in our economy and it comes at a time when oil companies are reeling in record profit levels.
The question becomes: should the government step in to regulate the price of gas?
A free-market advocate would argue that the increase in gas prices and the record profits of the oil companies are results of the finest aspects of capitalism. Oil companies are simply passing along the cost of the crises in the Middle East and consumers in America are not willing to adjust their lifestyles or purchasing patterns to keep costs down. Free market advocates would also argue that taxing oil companies or charging them a "obsessive profit" tax would undermine the incentive oil companies have to supply more of their product.
Regulators, on the other hand, would argue that since oil companies are making record profits at the expense of consumers who are tied into a car culture (inelastic demand?) that they cannot quickly change, the government should regulate. This regulation could keep the price of gas down while still allowing for a more modest profit for the oil companies. In this way, the government could also keep the modest economic recovery from falling apart.
Where do you stand? Regulate on oil companies or let the market take its natural course? Where do you think the major political parties stand on this issue?