What Would John Galt Do?

A whole different way of looking at "WWJD"

Wednesday, May 03, 2006

Anger! Obscenities!

USA Today headline: "Across USA, wave of anger building over gas prices" (http://www.usatoday.com/news/nation/2006-05-02-gas-prices-cover_x.htm?POE=NEWISVA)

Well, I'm starting to get angry too. Not about the prices so much, even though I should be. They're a disgrace. But anyone with half an education could have/should have seen this coming, and getting angry isn't going to change any of the facts. It's not rocket science; it's plain and simple economics. Unfortunately, no one learns economics in school any more -- and for that matter, no one learns critical thinking skills either.

So now we three-dollar-per-gallon gasoline, and people are screaming their heads off about it. The U.S. economy grew at an unbelievable annual rate of 4.8% in the last quarter, factory orders are up far more than anyone expected, and the service sector is booming. While the employment figures are not in yet as of this writing, they are expected to show that about 200,000 new jobs were created in the same period.

And people are screaming their heads off over gasoline that costs, after factoring for inflation, no more than it did in the 1980's. Now politicians are pandering to angry voters, promising what they can't deliver while doing everything they can to make matters worse; journalists and pundits are pointing fingers of blame all over the place (except, predictably, at the actual source of the "problem"); and a whole bunch of ignorant consumers are blaming the oil companies for <gasp> actually [caution: obscene word coming] making a profit!!

And now, to top it off, we now have ten attorneys general -- who apparently don't understand either economics OR the Constitution -- suing the Bush administration for not doing enough to screw things up even worse. In at least one of those states (New York), the AG is currently running for Governor. Hmmm, there can't actually be any pandering to angry voters going on now, can there? Oh, no... I'm sure that Mr. Spitzer is <cough> honestly doing his best to <cough cough> help the poor people of New York. Why, I'm sure he's just as honest as any other Democra... <horrible gagging noise>.

You cannot repeal the laws of science. Pass all of the stupid laws you want, and the Earth will keep spinning on its axis, water will continue to boil at 100° C (at sea level, of course), and, in obstinate defiance of diversity, triangles will continue to contain only straight lines.

Gasoline, and the raw materials from which it comes, is a commodity that is bought and sold in a competitive market. There are many suppliers: no monopoly controls the prices and there is no evidence of any shadowy collusion among the oil companies to control the prices either. Its price is determined by the market. Period.

Now, when you have a commodity that is in short supply, its price goes up. When you have a commodity for which demand increases, its price goes up. If you want prices to go down, you must either reduce demand or increase supply. This is pretty basic stuff.

So, the demand for fuels is up because the economy is doing better. That's not bad news, it's good news. And the supply... well, the same people who have been screaming the loudest about the high prices -- and even blaming the current President for them -- have done everything they can over the last 30 years to LIMIT the supply.

We have oil in Alaska. Lots of it. But the same people who are bashing the President -- for a problem THEY have spent the last 30 years creating -- continuously block every environmentally-sound effort to extract it. We also have oil off the coast of California -- but it's the same story. Environmentalists blocked efforts to drill for it decades ago, and now it's somehow George Bush's fault that we have high gasoline prices.

There hasn't been a new refinery built in this country for more than thirty years. But I don't suppose that has anything to do with the Law of Supply and Demand.

You would think that anyone with an education would be able to figure this stuff out. Instead we have people blaming the oil companies, blaming the President, blaming anyone but themselves -- for a problem that anyone with half a brain could see was going to happen someday.

And the stupidity goes on and on. Any time the oil companies [caution: obscene word coming] make more money than what someone thinks is "appropriate", we have politicians promising to take it away from them. Now, anyone who thinks he has a right to decide for someone else how much money s/he should be allowed to make -- really IS obscene.

But we still have politicians who think that they can persuade the oil companies to find and produce more oil by taking away their money when they make "too much" of it. Jimmy Carter tried that in the late 1970's with his "windfall profits tax" that caused domestic oil production to plummet. And the politicians think that this time around, they'll get different results? Isn't making the same mistake over and over, and expecting different results, the definition of "stupid"?

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