So You Spend Too Much on Gas, Eh?

It's virtually impossible nowadays to go to the office or out to a bar on the weekend without hearing people complaining about the rising price of gasoline. So I thought I'd do a little comparative analysis in the attempt to assuage the delicate sensibilities of those among us who are inclined to take offense at the free market.

For starters, I may as well go on record and say that the rising prices of gasoline are nothing more than simple supply and demand. As Thomas Sowell wrote recently, "With the economies of huge nations like China and India developing more rapidly, now that they have freed their markets from many stifling government controls, more oil is being demanded in the world market and there are few new sources of supply."

And as Larry Kudlow wrote in his latest column, "Rising gas prices and home values represent the forces of good, not evil." I have several good friends who are in the market for a new house and the prevailing mindset among many is that it's just "too expensive" to build one. In southern Maryland, it's not uncommon to have to spend $400,000 for a three bedroom, two bathroom house on half an acre of non-waterfront land. But it would behoove us to realize that this is a good problem to have, considering some alternatives. Increasing prices reflect increasing growth and prosperity, not poverty. In my hometown of Olean, New York, low land values are indicative of a sagging economy and little to no economic growth.

But back to my little project. On Friday, my friend Mike and I were hanging out at a favorite watering hole: the Tiki Bar in Solomons, Maryland. While standing on the pier we overheard a guy complaining that he just had to spend $2.49 per gallon to fill his tank. Before heading to the bar, we assumed. Where he presumably proceeded to spend at least $3.00 on the Yuengling he had in his hand.

Mike and I couldn't help but note that at $2.49 per gallon, the man spent roughly $.02 per ounce per gallon of gas, considering a gallon equals 128 ounces. Interestingly, we didn't hear him lament the fact that he'd just dropped $.25 per ounce for his can of beer.

And so we can go on and on. It's not abnormal for many couples to go out to dinner once a week. How many will order a $4.00 glass of wine? At about 5 ounces per glass, that's a whopping 80 cents an ounce!

Or perhaps a vodka tonic is more your style. A drink containing merely one ounce of Grey Goose vodka will run you at least five bucks in any restaurant or bar. That's right. That's five bucks an ounce. Your Explorer only costs you two cents an ounce today in southern Maryland.

Yes, yes, we must dump gallons and gallons of gas into our tanks, thus driving up our total cost. If you're the type of person who hits the bar, has one drink, and calls it a night, I'd likely entertain your argument for a few minutes. But the point remains, most Americans enjoy a lifestyle where it isn't uncommon to engage in deliberate frivolous spending. And why not? We work hard for our money. But it would be wise to educate ourselves in the basics of economics while we're at it.

That countries like China and India -- not to mention the former Soviet territories now democratizing in Eastern Europe -- are turning more and more to capitalism is undeniably a good thing, both economically and politically. But if we're determined to demand from our government "solutions" to the "problem" of rising gas prices that they are in no manner capable of solving, we'll surely get what we wish for -- and be ever worse off for it. Government can and should do nothing, unless that means combating the political hysteria that accompanies the cries against increasing our own production, which limits supply and only drives up prices in the face of increasing demand in the first place.