Check out the latest edition of Foreign Affairs for an interesting perspective on high oil prices. Of interest is also the lack of change in consumer confidence. Nothing underscores the need for a little education in economics like watching Bill O'Reilly and Lou Dobbs spin up to their hurricane force frenzy over what is a result of a free market and growing global economy.
5 comments:
It's funny. Everyone talks about how much profit "Big Oil" (or should that be "BIG OIL") made, but no one seems to care how much they spent to make the $8.4 billion. If they spent, say, $5 billion and earned $8.4 b, then yeah, it's gouging. But if they spent $390 billion and only have $8 b's to show for it, well, maybe they are not charging enough.
The problem with fuel is that it has an "inelastic" price. In other words, people have few substitutes and will pay whatever the price. I think the administrative review will reveal that.
Now will anyone believe it?
No, they won't. One problem is that this is a complicated issue, with many reasons contributing to the price hike. But it's human nature to want a simple, easy answer to our problems, and politicians with low poll numbers are all to eager to take advantage of the situation to try and gain a few more precious votes.
Another is the spectre of Enron and the way they gamed the system. Of coarse they were more able to do that as a result of bad lawmaking here in California. And I fear congress will pass hastily crafted legislation intended to help but will hurt us all down the road.
Ooops. Ranting again.
Rant away, my friend! It's free!
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