I just love it when my economic hero is quoted, and they even used the quote I've been stealing for my entire economic teaching career: "Inflation is always and everywhere a monetary phenomenon." Modern monetary theory sought to debunk Milton's theories; however, he's now having the last laugh. You simply had to look south of the border to Venezuela to prove his point. As the monetary printing presses where humming, inflation soared to over 1000%. Their economy was decimated as a result.
Now, let's talk price controls. Price controls are as old as time, and sound like such a good idea, but in practice completely backfire. Here again, what I was taught in undergraduate microeconomics almost 40 years ago still holds true. I continue to marvel at the predictive value of microeconomic theory! Let's start with my area of expertise: gas & diesel prices! Why are they so high?? Microeconomics has a lot to say about this because the fuel market, just like many others, is where buyers and sellers come together to exchange things. In this case, money for fuel! Microeconomics tells us that there is a demand for fuel, and a supply for fuel Because we have fundamentally embraced free markets here in America, fuel suppliers are free to charge whatever the market will bear, and consumers are free to fill up, or not, at the market price. When supply decreases (due to actual and perceived sanctions against Russian crude/fuel), and demand increases (daylight savings time, and Covid lockdowns waning), microeconomics predicts that prices will rise! Here's some actual data to back up my point: my cost of diesel from the refineries shot up $1.50/gal in 8 days last month! This was even more than the increase in gasoline of $1.00/gal. As an aside, I myself could not understand the discrepancy in the gas and diesel price changes, so I called a supplier. She explained that Russia is a huge diesel producer (I did not know this), and that the market was struggling to determine the scope of the ensuing supply disruption, with economic sanctions coming to bear. Both gas and diesel have come back down, but are still about 50 cents higher than February.
Invariably with the fuel market, and its impact on each and everyone of us, the idea of limiting gas prices sounds like such a good idea, right? Wouldn't it be nice if gas were only $3/gal? Let's think on this a bit. As we live in a predominantly "free" market, suppliers can't be forced to produce, and will be reluctant to do so at $3/gal. Hence. they will pull back on production. Consumers on the other hand, will cheer at the low price and come out in droves to fill up! Unfortunately, this creates and economic problem: quantity supplied is LESS that quantity demanded. We have a one word summation of this economic problem: SHORTAGE! Normally, shortages are cleared in a free market because prices will simply rise until we come back to equilibrium; however, price controls will not allow this to happen. Mark my words, should the administration try this, gas lines will result, fuel shortages will result, and economic chaos will ensue. Just ask Hawaii. They tried gas price controls, and failed miserably. Refiners simply quit shipping gas to Hawaii and sold it in the states for more money, duh!!
So far, the progressive call for price controls in order to "limit the greedy corporate robber baron profits," and assuage the angry consumer have gone unanswered. However, the release of strategic reserves is attempting to do the same thing. From a microeconomic standpoint, increase crude oil supplies (by whatever means possible) and prices will fall. Prices did fall by a measly 4% after the announcement. It begs the question: Are high gas prices alone a sufficient reason to release "strategic" reserves? I'll leave that to the national security experts. Having spent 30 years in this business, I would have thought that being "energy independent," with the discovery of vast untapped crude oil reserves would have been a good thing. After all, I can remember the gasoline lines of the 70's and our reliance on OPEC. However, climate policy dictates drubbing the oil companies, and they are not prone to opening the spigots after having been so castigated in the past. What a strange world we live in...