Thursday, September 01, 2005

Gasoline Price Ceiling?

Arnold Kling
". . . I tried to explain that if the futures price indicates that next week gasoline will be at $3.00 a gallon and you as a dealer bought it at $2.00 a gallon, it is neither in your interest nor society's interest for you to sell your gasoline at $2.00 a gallon.

I suggested that the best policy now would not be a price *ceiling* to hold down the price of gas, but a price *floor* to immediately raise it to a level that would slow panic buying. My idea is to have the government recommend a price per gallon of $6 through Labor Day, $5.50 from then until October 1st, and $5.00 for the month of October. The idea of having a pre-announced, staggered schedule is that it reward the people who put off buying gas and punish the idiots who are rushing to top off their tanks."

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