Montilla Threatens But Offers No Solutions
Minister Jose Montilla held a meeting with the Association of Petrol Operators to convince them to cut their margins for the common good. The same old thing –threats from government to avoid responsibility and blame.
When a high level government bureaucrat “asks” a private company to modify its prices, this is not the same kind of advice you might give a friend. You give your friend disinterested advice, and your friend, if he wishes, accepts or rejects it without fearing reprisals from anyone. However, when the government offers advice, if it isn’t followed, there are serious consequences. This is one of the strategies, for example, the Bank of Spain tends to employ. It sends out advice to banking directors. Sometimes they ignore the advice because it would mean losing clients. The “banking police’s” reaction is to start inspections to teach that bank a lesson about who is boss and make it lose time and money. This is how the bureaucrat works against the people.
Regulations make companies work, not for their clients, but for the useless and obsolete bureaucratic entity. When the economy hits some “problem” the solution is not more intervention, this would only complicate the problem further.
An ideal solution for reducing gasoline prices would be to eliminate all taxes on fuel (almost 60% of the price of gas in Spain corresponds to taxes). But Montilla has found the typical excuse used by mediocre technicians: “this is very difficult because…”. Imagine if the consumer of a private company stopped buying from it because he considered its prices too high. Would it do anything if the company CEO said he can’t lower prices because some technicality is in the way? Obviously not. The consumer would go to the competition without paying the least attention to the company’s excuses. A private company’s goal is to serve the customer. If the customer is happy the company is too because it will make more money. This is how capitalism works.
What Montilla does not understand is that Spaniards could care less about the problems he might have eliminating taxes on gasoline. This is why he prefers to threaten companies (and these companies’ workers) to reduce their margins and put the energy sector’s labor market in even greater difficulties.
But there is more. Montilla believes he is a great energy businessman. This is why he feels he is in a position to offer “advice” to the oil companies about how they should manage their business. He told them to work harder to modernize their technology by increasing investment in refineries and research and development (R+D). In the mid-1980s, Exxon decided to invest in renewable energy, spending 1 billion dollars; the results were awful and Exxon said it would never make that mistake again. The company tried, but its client (the final consumer, you and me) clearly and openly told it this was not the way to go. A politician, like Montilla, can threaten and pass whatever laws he wants against the petrol industry and society to achieve his divine plan, but this will not make the world a better place. Instead, it will destroy the sector, increasing costs and making the final product, in the end, more expensive.
Mr. Montilla, the solution is very simple. Do not intervene in the economy and everything will improve. Stop threatening companies and individuals and choose a real solution for Spaniards: completely de-regulate the entire energy sector; eliminate all the supposedly environmental-friendly laws –these are of interest only to politicians and hysterical pressure groups, not the head of a household trying to make ends meet or an entrepreneur who sees his costs rising without stopping to blame state intervention; get rid of all taxes on fuel; and above all, take a long vacation and don’t do anything; your work makes us all lose.