There are 150,000 gas stations in America, and most of them are independent “mom and pop” stations.
Similarly, there are 9,000 oil companies in America.
So – it is comical to hear politicians accuse the oil and gas industry of “colluding” to create higher gas prices – when it would be impossible.
Gas prices are so high because: (1) supply chains are still bottlenecked; (2) the Biden administration limited supply; (3) the war in Ukraine cut off Russian supply; (4) production costs are much higher due to inflation; (5) inflation in general is pushing up gas prices; and (6) oil companies are reluctant to invest in more production because they fear a recession and/or political backlash.
I am sure there are many other reasons too, but my point is that there is no one reason we have high gas prices now.
So – we can’t be mad at any one entity or person, even though we might want to. 😊
What terrifies me though is that the government might step in to “save us” with price controls and/or regulation – because nothing creates shortages and higher prices more than the government trying to control prices or increase supply.
We saw this in the 1970s and it was utterly disastrous – creating both shortages and higher prices.
10 Minute Mortgages
I bring this up because we saw the same thing with mortgages after the 2008 meltdown – when the government vastly over-regulated and made mortgages 100x more difficult to obtain than necessary.
Yes, lending guidelines were far too lax prior to 2008, but the government fostered many of those issues by, among other things, pushing for more homeownership via lax guidelines, by keeping rates too low, and by encouraging Fannie Mae to BUY many of those horrible loans (creating an artificial market for them).
So now it takes us hours to pre-approve many of our borrowers and they have to spend inordinate amounts of time chasing down proof of large deposits, explaining minor credit inquiries, explaining employment gaps, getting gift letters, and getting rental history verifications from landlords they have not seen in years… among other things.
Some of these requests are prudent lending, but many are simply a result of over-regulation.
And – without all those regulations, lenders could use algorithms that would be much better predictors of ability to repay a loan than anything that lenders are doing now.
In other words, if the government ever got out of the mortgage industry, it would take about 10 minutes to qualify for a mortgage.
And those mortgages would likely perform as well as or better than any of the loans we are underwriting and funding today.
So, the next time you are getting mad at the gas pump, please hope that your local politician does not step in to save you.
Or getting gas could be as difficult as getting a mortgage.
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