Can gov't cap the price of gas at the pumps?

Question

Can gov't impose a cap on the average price of a gallon of gasoline? Can gov't set a ceiling for regular unleaded, unleaded plus and super unleaded gasoline to let's say 4.30, 4.35 and 4.40 a gallon respectively for each?

Answer 1

The goverment can do just about anything, it's just a matter of if they are willing to or not.

Answer 2

They would have to take over the whole oil industry.  The gas stations only make about 5 cent to 10 cents per gallon.  And given most of them are independently owned, they have to raise prices if their supplier charges more.

So the government would have to make sure the refinery and the crude suppliers and the WALL STREET speculator all stop raising prices.

There's a better way.  Conserve.

Good Luck...

Answer 3

It could, but it would be a terrible mistake.  

Price controls interfere in the economy.  As gas prices get higher, people tend to seek alternatives.  If gasoline prices rose high enough, people would turn to alternative fuels and electric cars or give up private cars and use mass transit.  A higher price of gas is necessary to make people give up on gas.  It could take a price of $8 or even $12 per gallon, but eventually you will make a change.  

If the price of gas were capped, people would not switch to alternatives.  

Gas companies would refuse to operate at a loss, so gas would become scarce or impossible to find.  They are not required to sell product.  They only sell if there is profit to be made.  If prices were capped, the cost of production would still rise and profit would disappear, so they would stop offering gas for sale.  A black market would develop for gas.  It would be at a higher price than the fixed-price and it would bypass the conventional gas-tax process.  That would deprive the states of revenues required to maintain roads and other things.

I suggest you look into the history and consequences of rent-control in major cities as an example of price-caps.  As the rent revenues stay the same and the cost of maintaining a building rise, the landlord is unable to provide adequate maintenance.  Apartments become slums.  Real estate developers refuse to build apartments in rent-controlled areas instead building offices or other commercial properties so they can collect reasonable rents.  Apartments become scarce.  

It is always better to let market forces establish prices and alternatives.  Government interference in the economy is always to be avoided.