Short on gasoline, long on greed.

For the last few years, the people of Northwestern Ontario have seen gasoline prices consistently higher than other areas of the province or country. Not only that, but when it would go down, it would do so very slowly and then move up an unjustified 7-8 cents all at once before a weekend. While the petroleum industry will try to justify what some people may call predatory pricing, many of us instinctively know that they do it because they can get away with it. In other words, the pricing (while somewhat tied to demand and supply) is also based on a corporate core belief to charge what the market will bear.

This concept stands on what economists call the "efficient market theory," that is, at any given time, the market forces of demand and supply will guarantee the best possible price. Of course, this theory rests on the basic premise that there is equilibrium in the market, otherwise the market would not be efficient. This concept works well in theory and, at times, also in practice. However, the problems start when there is no equilibrium, due to a number of reasons. One simple example is the oil cartel established in 1974, that suppressed supply sufficiently to drive up the price of oil to astronomical levels. That action alone started an inflationary spiral that almost bankrupted the western industrialized world, heavily reliant on petroleum products.

Of course, the oil producing countries and companies all made huge profits (they still are), and they justified their actions by telling the rest of the world how we were running out of oil (i.e. curtailed supply in the face of constant or raising demand to increase the price accordingly). Remember that? Now, having said this, some people will say that as a society we consume too much (i.e. raising demand for more and more goods or gasoline, etc.). By doing so, we play right in the hands of those corporate types who have no scruples, and will take advantage of a consumer-driven society. Unfortunately, to a large extent I have to agree with them. Here is why.

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I believe corporate greed would not be sustained without consumer greed. Take the stock market, for example. In the early years of the stock market, a few people got very rich by manipulating stock prices. They were able to do so because there were few controls. The stock market crash of 1929 and the subsequent depression led to the creation of the Security Exchange Commission to protect the little guy.

One would have thought that could not happen again. But it did. It happened when the price of gold was getting close to $1,000 per ounce and people were lining up at the banks to buy gold bullion in the hope of making a quick buck. It happened again more recently, with technology stocks selling for $100 per share before they even hit the market place. Why? Why do rational people want to buy shares in a company that has no assets, no products, no client base, nothing at all, except the promise of getting rich quickly?

Consumers' desire for unrealistic high returns on their investments has been the driving force behind the push for more profits, outrageous salaries for chief executive officers, golden parachutes, bonus plans, stock options, etc. The scandal of Enron, the financial demise of telecommunication giants like Nortel and Teleglobe, and the investigation of world-class accounting firms like Anderson, are all symptoms of a greater underlying problem.

I believe that when unbridled motivation for profits and return on shareholders equity is not balanced with the highest level of ethical and corporate responsibility, crazy things start to happen. Our modern society's core value system, and the belief that more is always better has been driving corporate America to new economic heights, but the loss of confidence in the "system" crashed the stock market in 2000 and in the process wiped out a trillion dollars worth of investments. Unfortunately there is a lot of retirement dollars in there too, and the little guy got hurt again.

While we may not have 20 per cent unemployment as during the Great Depression, what is happening now is a great shame on those regulatory agencies that were supposed to make sure the public was protected from corporate abuses. So if the system does not protect us, how do we protect ourselves? The answer is simple. I believe that ultimately, each one of us has to assume responsibility for our own actions as well and spend/invest judiciously. A return to a more sound value system would also be a good start.

Frank Pullia is the Principal of Pullia Accounting & Consulting. He can be reached at [phone] or via e-mail at [e-mail]