text: gov't fuel price control? on this question, someone asked about the fed gov taking over oil prices. http://answers.yahoo.com/question/;_ylt=ambkbyhr34dnclahkpzzay9izkix?qid=1006042525766  beside gut reactions, which that one is full of, can someone provide a clear, concise reason as to why or why not to have the government federalize fuel? first, the oil companies are making around 10% margins on gas.  see exxon's income statement here: http://finance.yahoo.com/q/is?s=xom&annual  so, if the government decided to chop off some of that last 10%, you might get back some of that.  most people aren't going to be happy with just a few cents, though.  from basic economics, if you impose a price ceiling, supply drops: http://en.wikipedia.org/wiki/price_ceiling  firms try to maximize their profits, so they'll be willing to produce less at a lower price.  if you lower it so that each gallon of gas is giving them negative profit (p < avc), they'll just stop producing gas completely because it's dumb to keep on losing more and more money unless you're msft selling xboxes trying to get market share.  they could also just sell it elsewhere and start exporting, where they can get a better price for it.  china and india are starting to demand more oil as their economies grow.  or even sell the crude oil (without refining it) on the futures market and drive that down a little.  either way, the most likely scenario of a drastic price ceiling is long gas lines, similar to what happened in the 70s.  it's arguable whether this is more or less desirable than higher gas prices.