It's the market, not government, that sets prices

Before I start, I want to say “kudos” to our Assemblywoman Marie Waldron for her always clear and concise reportage of what’s happening in Sacramento.

But for Superintendent Desmond, not so much. He says we have “relentless inflation”. The fact is, inflation has been relenting for the past two years. In 2022, it peaked at 8.5 percent, but was down to 5.0 percent in 2023, and 3.4 percent in April 2024 (latest report). And the Fed (Federal Reserve) has shown that it has no intention of relenting in its effort to lower the rate to the desired two percent, or very close to it.

Also troubling is his inference that inflation is the government’s fault. If he would step back and take a larger view, he’d see that following the worldwide Covid-19 Pandemic, with it’s suppression of buying, it was inevitable that the pent-up desire to purchase would result in inflation: worldwide. And indeed it did, hitting all the developed countries. But America, with its resilience, fared the best. Remember, it is the market, not government, that sets prices.

He also declared the disparity between the national average cost of $3.66 per gallon of gasoline versus California’s $5.40 to be “unjustifiable and unsustainable”. He’s wrong on two counts. First, those figures are actually from 2022. The figure for California, May 20, 2024 is $4.965. Second, as long as California holds to its clean air standard, there will continue to be a justifiable disparity due to the extra processing required. He also says he thinks there shouldn’t be any gas tax at all. Well, taxes on gasoline are appropriate for funding the maintenance of our roadways. And an additional two cents is trivial compared to the fluctuation in the price of gasoline caused by the volatile price of the crude oil from which its made.

Something we can agree on is that California gasoline has been costing too much. For that reason California’s Senate introduced Bill SX1-2, the California Gas Price Gouging and Transparency Law, which Governor Newsom signed in May 2023, to go into effect June 2023. The title kind of gives away its purpose. And it is working! Consumer Watchdog reports: “In October 2023, at the time of Newsom’s call for penalty, the US-California gas pricing gap stood at $2.43 cents. By January 2024, after the introduction of legislation empowering regulators to impose a price-gouging penalty [Bill SX-1], that gap fell to a low of 86 cents.” And this may well be just the beginning of our government’s investigation of possible monopolistic pricing in other areas, such as food pricing.

John H. Terrell