Multiple Economic Personality Disorder
While I don’t like paying $50 to fill my gas tank, every time I do I remind myself that this surge in oil prices is helping along the search for an alternative energy source. When oil prices are low, there is little incentive to do R&D, especially if the cost of the new source comes in much higher. But as the price of oil climbs, the incentive to innovate becomes stronger, and leads us closer to a solution.
But there are some that, while they proclaim they want the latter, also complain about the former. Unfortunately, all 3 of the major candidates for President are among that crowd.
This tiff over gas and oil taxes only highlights the intellectual policy confusion – or perhaps we should say cynicism – of our politicians. They want lower prices but don’t want more production to increase supply. They want oil "independence" but they’ve declared off limits most of the big sources of domestic oil that could replace foreign imports. They want Americans to use less oil to reduce greenhouse gases but they protest higher oil prices that reduce demand. They want more oil company investment but they want to confiscate the profits from that investment. And these folks want to be President?
Higher prices are doing what they’re supposed to do; encouraging conservation. This is a good thing. I know it’s hard to understand when you’re watching the numbers fly up on the pump, but in the bigger scheme of things, it can be an aid to discovering the next big, clean energy source. I have in the past covered those who are antagonistic to clean, renewable energy (oh please, read those links; just dripping with irony), but these politicians — these allegedly smart people who supposedly see the big picture — should be the ones educating the public on this issue, not pandering and just rounding up the usual suspects.
Prices convey information. They affect demand. Artificially manipulating them doesn’t do any long-term good.
[tags]energy,oil,gas prices[/tags]
Filed under: Doug • Economics & Taxes • Environment • Government • Politics
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Unfortunately, all 3 of the major candidates for President are among that crowd.
That’s because the last time a president called for us to live more responsibly and without subsidizing oil companies and motorists (as we currently do), he was nearly crucified for it.
God bless Jimmy Carter – at least on this front he had the wisdom we should have implemented decades ago. Shame on the presidents since Carter for ignoring this problem and whoever is president next (Obama) is going to be saddled with the problem of dealing with decades of burying our heads in the sand.
Fortunately for all of us, I think Obama is probably the best to deal with this problem.
Well, if you read the article, it appears Obama has his head just as sandy as the others. Doesn’t sound to me like he’s come to grips with the real economics of it any more than the other quick-fixers.
“Windfall profits” indeed. Since when was 8% profit a “windfall”?
I am curious. What did Carter say or do regarding this? I honestly don’t remember.
He was the one who started wearing sweaters and turning down the thermostats and encouraging Americans all do the same. If you recall, we had our first peak oil scare in the 70s and Carter was all about cutting back on use, seeking to reduce demand. He started encouraging research into solar and other alternative energies.
Americans found it all too depressing and wanted to find easier ways to deal with peaking oil and thus was born our foreign fuel dependency and our interfering/manipulating Iran/Iraq, etc, etc, etc for purposes of protecting “our” oil.
Obama has at least used some correct language. He is absolutely correct that having a summer where we reduce our gas tax (which is already woefully low) is not any significant solution and he said recently, “The only way we’re going to lower gas prices over the long term is if we start using less oil.”
He is incorrect in stating that we’re going to lower gas prices, but correct in the notion that we are going to have to start using less oil.
Tonight I want to have an unpleasant talk with you about a problem unprecedented in our history. With the exception of preventing war, this is the greatest challenge our country will face during our lifetimes. The energy crisis has not yet overwhelmed us, but it will if we do not act quickly.
It is a problem we will not solve in the next few years, and it is likely to get progressively worse through the rest of this century.
We must not be selfish or timid if we hope to have a decent world for our children and grandchildren.
We simply must balance our demand for energy with our rapidly shrinking resources. By acting now, we can control our future instead of letting the future control us…
Because we are now running out of gas and oil, we must prepare quickly for a third change, to strict conservation and to the use of coal and permanent renewable energy sources, like solar power.
The world has not prepared for the future. During the 1950s, people used twice as much oil as during the 1940s. During the 1960s, we used twice as much as during the 1950s. And in each of those decades, more oil was consumed than in all of mankind’s previous history…
~excerpt from a Jimmy Carter speech, 1977
Very interesting, very prophetic reading. Unfortunately, we Americans don’t like downbeat presidents. We much prefer to have our ears tickled with good news. More oil. No change in lifestyle. Gobble, gobble, gobble…
To brag a bit.
😀
And Dan, the statement “we are now running out of oil” … is just as false then as now. We are not. We won’t in our children’s children’s lifetime … if ever. Oil however will become somewhat more expensive, perhaps to the point that causally burning a gallon or two to go downtime for a “night on the town” will be an extravagance. But rising prices of oil make shale oil, more sophisticated extraction, and even conversion from methane or coal feasible.
A correction then: When I say “running out of oil,” that’s shorthand (as I’ve explained in further detail fairly often, but maybe not here) that we’re running out of cheap affordable oil in quantities sufficient to run our economy as we’ve built it.
The result will be prices doubling, quadrupling and who knows how much more and not just for oil but for everything on which we depend on oil – including food. And while $5-10/gallon gasoline is a severe inconvenience for our affluent lifestyle, wheat, rice and corn prices that have tripled are deadly for millions of people.
We must need reduce our extravagant dependence upon oil in every aspect of our lives and live much more responsibly and if we choose to try not to do so, people will die. They already are.
Dan, glad to have you on board for drilling in ANWR and offshore to decrease our dependence on foreign oil. >grin<
And just a note; corn prices specifically are rising in large part due to its use in ethanol.
Also, oil on the commodity markets is always sold in dollars, so the weak dollar is a huge portion of the oil price issue. Of course, the crisis in the housing industry is one of the big reasons the dollar is seen as weak right now. Of course, part of the problem with the bad loans the creditors got stuck with was the insistence of Congress to get lenders to give loans to folks that they might have otherwise turned down, in an attempt to show they “care” about the poor (by saddling them with debt they can’t bear).
So, when you want to decide who to blame high gas prices on, one group that bears some of that should be the government for “caring”. Supply may figure in, but folks are way too eager to blame their favorite hobby horse for their problems. In an election year, moreso.
Certainly, there are more factors than one in an economy as complex as ours. The reality remains, as supply dwindles and demand increases, prices will rise. Capitalists will be encouraged to do things like make ethanol (to make our “pain” less) even though one result of this will be to increase food prices (making our pain greater – and the pain of the starving millions unbearable).
That would be a fine example of the problems of an unfettered economy. Thankfully, the Republicans are busy right now trying to stop Bush from encouraging more ethanol (and thereby regulating the economy) as a solution. Yeay, Republicans! (Who’da thought I’d ever say something like that?)