Ross: Are rising gas prices just the free market working the way it’s supposed to?

Apr 7, 2022, 7:00 AM
Gas prices, free market...
(AP Photo/Jeff Chiu)
(AP Photo/Jeff Chiu)

In an age-old ritual that plays out every time gas gets expensive in an election year, oil company executives were summoned to the U.S. Capitol this week for the traditional Congressional beat-down.

Here’s Exxon Mobil CEO Darren Woods from trying to explain to Democrats that his company isn’t greedy:

“Our dividends were roughly $15 billion,” he said. “Half of our stock is owned by average American family, it was an important income stream for them in the depths of the pandemic.”

“So would you be surprised that the public record shows 14.9 billion in stock buybacks and dividends?” he was then asked. “Would that number surprise you?”

Actually, nothing surprises anybody at these hearings because everybody’s read the script: when gas prices rise, Democrats generally blame corporate greed, Republicans generally blame regulations and taxes. Or they try to.

Just as he wouldn’t cop to the Democrats’ charge of greed, Mr. Woods wasn’t buying the Republicans’ tax holiday idea either.

“What I’m saying is that tax holiday doesn’t change the amount of supply, and the question is how do supply and demand balance out, which will ultimately set the price,” he claimed.

What I see happening here is another example of our fickle affection for the free market. We worship its efficiency and elegance – right up until the moment it makes driving expensive.

This is how my favorite business analyst Jill Schlesinger explained the problem on Monday:

“Listen, the free market is actually working,” she posited. “You may not like the choice it’s making.”

If you believe in the free market, you focus on the choice it’s giving you.

The free market asks you a question in the form of a number. You are then free to pay that number or buy less of that product. Some of us are choosing to buy less, by, in my case, driving a little slower; others freely choose to drive faster and spend their money pushing air and then complain about it.

And that same free market also tells oil company executives that if I want people to invest in my company, I’d better reward them from time to time with dividends.

“Their own shareholders had demanded that they get money back in the form of dividends, and not use that money to drill,” Schlesinger described. “That’s the choice that these big companies have made.”

So when it costs me $100 to fill up my tank, should I just know that’s the free market working the way it’s supposed to?”

“Or, you can just say, ‘why don’t I have an electric car,’ or ‘I should have walked,” Schlesinger answered.

Or driven a little bit slower. Just an idea. You are absolutely free to exercise your right to push air.

I will not judge you. Heck some of you are whizzing by me so fast I can’t even see you!

Listen to Seattle’s Morning News with Dave Ross and Colleen O’Brien weekday mornings from 5 – 9 a.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.

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Ross: Are rising gas prices just the free market working the way it’s supposed to?