Water and gasoline have something in common. Sellers must treat them much the same, even though industry sells fuel and we need government monopolies to sell most water.
We applaud the Colorado Springs City Council, which doubles as the board of directors for Colorado Springs Utilities, for planning proactive measures to protect our access to water. Even governments use pricing to manage supplies.
When gas prices soar, usually during summer vacation season, conspiracy theorists rush to the scene and cry foul. Even some sensible conservatives, most notably Fox News anchor Bill O’Reilly, complain of greedy oil executives who apparently congregate in smoke-filled rooms and decide to jack prices for the sake of unfair profits.
These benevolent conspiracy theorists never explain why price-fixing oil barons stop at $3.50 or $4 a gallon. If they have the magic to set prices at will, basing decisions on their self-interests alone, it seems awfully kind they don’t sell fuel for $10 a gallon or more. Given the supposed powers and sinister motives of the industry, one wonders why prices ever come down.
Of course, oil producers do not get to dictate prices. Market forces determine price and essentially negate the morality of industry executives. In summer months, demand goes up. If supply and distribution cannot instantly increase in direct correlation with demand, the price of the commodity naturally goes up. It must, or wholesalers and retailers would quickly run out of gas at a burden to themselves and their customers. Price fluxuation protects consumers and sellers alike. A price is nothing more and nothing less than a valve that controls the rate at which a market consumes goods, services and commodities.
Producers responded to high demand last summer by pumping, refining, wholesaling, transporting and retailing more fuel. That, combined with today’s reduction in demand, has resulted in a consumer-friendly lagging surplus. An industry composed of riggers, refiners, transporters and retailers must find a way to move the abundant fuel supply and each player has only miniscule control of the price.
We wonder where the conspiracy theorists are now, as stories emerge about plummeting prices at the pump. Did executives meet in a smoke-filled room and decide to gift consumers with cheap gas? Not quite. All participants in the industry must adjust prices to encourage consumption so demand will catch up with supply.
As fuel supplies reach record highs, and prices shrink, members of the Springs Utilities board grapple with the opposite problem in regard to water. They face the prospect of record-low reserves. Mother Nature didn’t conspire in a board room, but she has been stingy with moisture of late. If she doesn’t increase the supply dramatically, and soon, the city won’t have enough water to meet demand at current rates of consumption. Board members will discuss rationing measures on Thursday that will include tiered price hikes.
“I think we have the processes in place to use the market system to implement the (water) conservation. In other words, we tell people, ‘If you’re going to use a whole lot more, then you’re going to pay a whole lot more,’” said board president Scott Hente.
Intelligent, reasonable and fair. By all means, raise prices to save our water until the drought subsides. The last thing we want is a severe shortage in which taps run dry.
Prices are not conspiracies. They are valves. Lower a price to speed consumption, raise it to protect a supply. This market tool protects buyers and sellers alike, even from uncontrollable forces of nature.