Subject: Windfall profits tax needed to rein in gas prices - response

Dear Editor,

I am disheartened when reading editorial letters from folks who
obviously have no grasp of basic economics and the free market system.
There are alternatives to capitalism.  They are socialism and communism.
In the first system, the free market recognizes the basic law of supply
and demand.  The other systems, socialism and communism, the economy is
directed by the government.  The Soviet Union, North Korea, Cuba, and
now Venezuela practice this economic model.  They have price controls
imposed by the government.  This sounds great until one realizes that if
a producer is unable to make a profit, he will cease his efforts to
market the product and supply will dry up and prices will sky-rocket.

The writer fails to recognize the fact that petroleum products are
priced in a world market according to supply and demand.  Now that
China, India and other third-world countries are developing
oil-dependent industries, their demand decreases the existing supply.
We have been unable to domestically increase the supply because of
several factors.  Environmentalists and the "progressive" element in our
society has effectively vetoed the opportunity to obtain the vast
resources of oil and natural gas in Alaska and off both the east and
west coasts.  They have also stymied efforts to license the construction
of needed nuclear reactors which would replace oil-dependent power
generation.  In addition, they have also obstructed all efforts to
license and build new refineries, the lack of which has severely limited
the supply of gasoline.

The lack of basic economic knowledge is responsible for the demonization
of oil company profits.  To repeat, market forces, not oil companies,
are responsible for oil prices.  Another false assumption is that higher
corporate taxes will result in lower gas prices and punish greedy
corporations.  This Marxist theory has never worked.  Any and all
corporate taxes are passed on to the consumer.  Period.  The writer is
encouraged to examine the annual report of any oil company and see
exactly how much is spent exploring for new sources of oil and natural
gas.  These stockholder's reports will also show how deeply these oil
companies have invested in alternate forms of energy.

The assumption that we can tell Middle East oil producers to "back off"
is simply naïve and absurd.  What course of action does the writer
suggest we employ to overturn the supply and demand market system?
Exactly what threats or coercion would be effective in providing the USA
with a cheaper product while the rest of the world would pay a higher
price?  As it is, Korean drivers are paying $4.71 per gallon of gas
while their British counterparts are paying $5.64.

As for gas mileage in cars, the American consumer has spoken.  Count the
number of "gas guzzlers" on our highways.  If consumers demand more fuel
efficient cars, they'll buy them.  Instead, the same capitalist system
that has provided the greatest standard of living in the world,
continues to supply consumers with what they want.  Hummers and "muscle
cars" still appear to be in demand.  How many people have truly
curtailed unnecessary road trips?  Until our citizens are willing to
alter their driving habits, the high price of gas will continue.

And until Economics 101 is required in all schools, folks like the HDR
writer, will labor under the delusion that our economy would be better
off under a socialist form of government where producers and consumers
are servants of the state.

Derick S. Hartshorn
Conover, NC