Gas prices are back on the rise (again) which reignites the general sentiment that big oil companies are gouging us at the pump.  I’ve been thinking about this for a while now, and have come to the conclusion of: So what?

I always like playing the devils advocate, as it basically means I’m stepping out of my own viewpoint and seeing the matter from a different perspective.  Play the what-if game, it will help you find a better solution for the problem.

What if they aren’t gouging us?  What if gas prices are really this high based on fundamentals?  What would you do?

The basis of economic principal is very simple.  Supply vs. demand, coupled with selling a product for what the market will bear.  Fundamentally, if prices get too high, people will quit buying the product.  Note that I made no mention of why prices got too high.  It really doesn’t matter.  If the price of a product exceeds what the general market can afford, the price will either go down, or the product itself will go away.

This theory applies to gasoline just like it applies to paper, toothpaste, and toilet paper. Is the price of toilet paper getting to high?  You might consider buying a bidet, and you’d never spend a dime on toilet paper again.

I suspect that the driving force behind the gouging argument comes from the unwillingness of the general population to change their lifestyle; to cut back.  It’s easier to justify not cutting back if you can blame the problem on something you feel the government can control.

Whether the price of gasoline has gone up on a fundamental basis (i.e. supply vs. demand), or big oil companies are gouging you, the solution to the problem is the same.  Quit buying the product, or at least as much of it. 

No business can make any profit off a product that you don’t buy.

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