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COLORADO SPRINGS, COLO. -- With that oil well in the Gulf of Mexico leaking thousand of gallons of crude oil every day, and with the slick at the surface encroaching upon the shipping lanes of the Mississippi River, FOX21 News asked Money Coach Bill Stanley to give viewers a refresher course on the economic law of "Supply and Demand." Stanley was a guest on the show Tuesday, May 11.

According to Stanley, the law says that the price of just about anything depends on the relationship between supply (how much of the item is available for sale) and demand (how many people want to buy it).

"It should really be the 'Law of Demand and Supply,'" he said, "because the main factor is demand, whether anyone wants to buy it. If anybody wants it, then price is key to determining how much is produced, sold, and used. The function of the free market is to equalize supply and demand through pricing."

In the case of the Mississippi River, he said he thinks the situation is temporary so the affect in prices should be temporary. But there is more at play than just supply and demand. You will notice that the price of gasoline seems to go up faster than it goes down, and it tends to stay up over the long run. This is because it is possible to manipulate the market.

What is the government's role in all of this? Stanley said there are two sides to the argument.

"There are those right-wing idiots who think government should have no role in the marketplace," he said. "If that happened, we would go back to the artificial markets of the 19^th Century where monopolies could charge whatever they wanted. Gasoline would soon be $15 per gallon, and we would not be able to drive to work.

"Then there are those left-wing idiots who think the government should control everything, including prices," he said. "The price of gasoline might be set at $0.75 a gallon, but the oil companies would lose $1 a gallon and soon they would stop drilling, refining and transporting gasoline. There would be no gas and we would not be able to drive to work."

Stanley said the federal government has a role to regulate industry so market forces can work. He said the government's failure to supervise the financial industry led to this recent recession with its misery for many.

So you may be asking yourself -- What can a consumer do? Over the long-term, consumer demand is the driving force in the price and availability of anything.

"Consumers should use their power to keep prices down," Stanley said. "If it costs too much, don't use it or change products or use less of it. This seems hard to apply to essentials such as electricity and gasoline and food, but the power of conservation is stronger than we think.

"Use less water -- we all could take shorter showers. Use less gasoline -- we all could take fewer car trips. We can eat less expensive foods; we can walk in less expensive shoes; the old TV works fine -- wait two-three more years until prices come down on that flat screen.

"The bottom line:  It is up to us to determine the price of whatever we buy. Each of us must use that power wisely."

Bill Stanley and Money Matters airs every Tuesday on FOX21 Morning News.

If you have a question for Bill, contact him directly via e-mail: moneycoachbill@aol.com