With gas prices skyrocketing, economic conversations often turn into furious complaint sessions pertaining to these rising costs. What is rarely considered is how ridiculously cheap gasoline actually is. Upon comparison to a relatively simple commodity such as Coca Cola whose supply is seemningly limitless, the tremendous impact government subsidies have on one of our most coveted resources is suddenly obvious. When gasoline prices are compared to other liquid products, Snapple comes out costing 5 times that of gas, with nasal spray topping the list at a whopping 230 times the price of gasonline. Free market rationale is without an explanation as to how such a contested resource that requires so much time and energy to mine, convert, and transport can be cheaper than compounds whose complexity is barely beyond combining water and sugar.
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It is quite amazing. In trying to visualize it, it's easy to see how companies get away with selling sugar water for 5 or 6 dollars a gallon, simply because that's what the free market will bear, but the free market totally breaks down when people essentially riot for cheap gas, which they see as their lifeblood and right. That's when government intervention, spending and subsidies come into play. The thing people rarely realize is that it's their tax money anyway that's subsidising artificially cheap gasoline, so even out of their own pockets, it's not half as cheap as the price at the pump suggests.
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at April 27, 2005 11:25 PM
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