Document:California Press Release 15 March 2000 Why Are Gas Prices So High?

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400 Capitol Mall, Suite 900
Sacramento, CA 95814
For immediate release: March 15, 2000
For additional information:
Juan Ros, Executive Director
Phone: (818) 782-8400

Why are gas prices so high? Ask our government, Libertarians say

SACRAMENTO -- The current wave of gas price increases is a normal market reaction to supply and demand -- but endless government meddling makes gas prices much higher than they otherwise would be, the Libertarian Party of California announced today.

"The same politicians who are now decrying the woefully high price of gas should look in the mirror -- because it's their fault," stated Libertarian state chair Mark Hinkle. "Instead of succumbing to the temptation to 'do something,' the government should undo the mess it created."

Gas prices in the Bay Area have shot past $2-per-gallon, stunning motorists and leaving many to wonder what's behind the latest increase.

"The increase in the price of gas is a function of supply and demand -- that's Economics 101," said Hinkle. "OPEC nations decreased output after last year's glut, resulting in today's shortage -- which is only temporary."

The real problem, according to Libertarians, is government gas gouging. For example:

  • Taxes. According to the American Petroleum Institute, California has the fourth-highest gas tax rate in the country, totaling 50.4 cents per gallon in federal, state, and local taxes.

"California's gas tax rate is an outrage and hurts poor working families the most. Lawmakers should move immediately to repeal these onerous taxes," Hinkle said.

  • Regulation. California gas is the most expensive in the country because of state- mandated reformulated gasoline, which costs more to refine -- between 5 and 15 cents more per gallon, according to the California Air Resources Board -- and may be damaging to the environment.

"It's absurd that gas sold in the other 49 states cannot lawfully be sold in California," Hinkle noted.

  • Reserves. The federal government spends $340 million per year to maintain the Strategic Petroleum Reserve and other reserves, which energy experts agree are ineffective and wasteful. Government reserves also act as a disincentive for private companies to maintain their own petroleum inventories. The result, according to the Cato Institute: "Oil price spikes are far steeper than they need to be."

"The solutions are simple: gut the gas tax, revoke the regulations, repeal the reserves, and allow the market to do its job," Hinkle concluded.

"And when politicians want to help us through an oil crisis, don't listen -- they're just being slick."