Wednesday, August 31, 2016

Why Has Price of Gasoline Risen 69% in a Year? 1916

“Gas,” from the editorial page of the Monroe Journal, August 15, 1916, Monroe, N.C.

A year ago, gasoline was selling in Monroe for 16 cents a gallon. Since that time the price climbed till it reached 27 cents, and there it hung a long time. It has made a slight start downward and is selling at 25 cents. On this point the New York World says:

But why does gasoline suddenly become cheaper after as suddenly becoming dear? That is the prize puzzle of a system of price-fixing of which the oil industry has furnished many examples. The present reduction is attributed to increased production and a slackening for the demand for the fuel for the military needs of Europe. But certainly the domestic demand both for industrial and pleasure uses has enormously increased. The decline in price of crude oil has been slight, and it is not assumed that the long established and efficiently managed producing companies have only at this late day effected economies which make its production cheaper. Why, then, does gasoline cost less now than a month or a week ago?

Gasoline is more than ever a public necessity. The recent extreme fluctuations in its price have inspired Congressional inquiries. The Federal Trade Commission has just finished an investigation of methods of production and conditions of cost. Yet the mystery remains at most half solved. A good way to clear it up might be to subject the entire oil industry to Federal supervision.

If every State in which oil lands are located were to put a tax on every acre of oil bearing land based upon the rate at which such lands sell on the market, gasoline would sell everywhere in six months at 10 cents or less per gallon. A similar method adopted for coal fields would cut the price in half in two. The trouble is that the coal and oil producing lands have been monopolized and the supply is thus shut off. No amount of government legislation is going to do any lasting good. An adequate tax on all lands would open up the supply and bust the monopoly and nothing else will.

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