Record-high gas prices are not only costing Northern Nevadans at the pump, we expect they'll hurt businesses this Labor Day holiday by discouraging tourists from driving to Lake Tahoe, Reno and Carson City.
The double whammy is one of those subtle drags on the economy that undermines a steady recovery, in much the same way spiraling electricity and natural-gas prices two years ago sapped the marketplace's resources.
The energy crisis, we know now, had deep roots in manipulations by the Enrons of the world. It wasn't market prices driving the costs out of control; it was greed.
The same is being said now of gasoline. Big Oil is conspiring to rip us off, artificially inflating prices and reaping profits far beyond any moral expectations.
It's an argument that plays well with the masses, which is why California Lt. Gov. Cruz Bustamante is making it an issue in his campaign to win the recall election. Unfortunately, it doesn't ring true. Worse yet is the possibility public policy may be made on its foundation.
It's true gas prices are at an all-time high. But it's also true demand is at an all-time high.
There's also no denying the pipeline break in Arizona, the blackout on the East Coast and problems at two California refineries came at the worst times -- just before demand spikes for a traditional driving holiday.
These are market forces at work. Other facts of the market include refineries operating at near-total capacity, and few new refineries coming on line since the 1970s.
The short-term fix proposed by Bustamante for California is to place gasoline under state regulation, like natural gas and electricity. Hawaii is set to take a more drastic step next summer, when state law will place a cap on gasoline prices.
In the long run, however, more government intervention would be the last thing consumers need. Both examples above would tend to discourage companies from increasing their capacity, which would lessen competition. And competition is the only sure-fire way to keep prices low.
As August 2003 sets a benchmark for gas prices, it should also be noted as the month President Bush eased Environmental Protection Agency clean-air rules that will help refineries expand.
It's a reminder that the price we pay is not always measured at the pump.
