Suspending the Laws of Economics
Politicians in Texas have come up with an ingenious method of controlling rising gas prices. They intend to suspend the laws of supply and demand:
AUSTIN – Relief from soaring gas prices may soon be on the way.
The Texas House tentatively adopted a measure Tuesday that would suspend the state’s 20-cent gas tax through the summer.
That would mean an immediate 20-cent drop in the price per gallon.
“The more cars you have, the more relief you get,” said Rep. Trey Martinez Fischer, a San Antonio Democrat who added the proposal to an omnibus tax collection bill. “We’re sitting here on record savings. We used to say around here, it’s the people’s money. We ought to give it back.”
Now if that isn’t enough to make you want to rush out and buy more cars, I don’t know what will. You have to wonder, though, if demand is related in some way to price. Hmm. Something to think about. 🙂 After all, if reducing the price causes demand to come up, price will rise back to where it was, and that money will now be pocketed by the oil companies instead of the government.
But it isn’t just Texans engaged in this kind of thinking. Politicians across the country are following the lead:
Legislative Republicans said today they will try to amend as many bills as possible in the final weeks of the session to suspend Connecticut’s 25-cent-per-gallon state gasoline tax from Memorial Day to Labor Day.
“This is at least an attempt to let the citizens out there know that at least somebody is listening,” said Senate Minority Leader Louis DeLuca, R-Woodbury.
One person at least did “get it:”
House Speaker James Amann, D-Milford, called the GOP plan “an irresponsible, half-baked scheme” to “appease the public with pennies” while costing the state $120 million.
“Of course we are all concerned about the price of gasoline, but in reality any change in gasoline taxes brings no guarantee of real savings at the pump and probably only helps oil companies,” Amann said.
These schemes suffer from the same kinds of problems that various windfall profits taxes and gas gouging legislation suffer from: They do not seem to understand that price is related to supply and demand. If you lower the price, demand comes up, supply falls, and prices go back up. If you put a windfall profits tax in, you lower the amount of money available for expanding capacity (or investing in alternatives, for that matter) which means supply falls over time and prices rise. To make these schemes workable, they would need to be accompanied by rationing to keep demand in check. Otherwise, this is not a solution.
Barack Obama Doesn’t Get It
My hopes that Obama might be the kind of president who would embrace conservation are being dashed:
Sen. Barack Obama talks a good game. He also drives a good car, but the two are not entirely compatible.
The Democratic presidential contender was in Detroit on Monday, oozing charisma and environmental awareness as he chided local automakers for building too many big vehicles and not enough fuel-efficient hybrids.
So his choice to drive a V8 Hemi-powered Chrysler 300C emits a whiff of hypocrisy along with its exhaust fumes. Obama’s choice proves once again that fuel economy is seldom the No. 1 factor when Americans buy cars.
So although owning a hybrid is politically correct for presidential aspirants — many report that they do — this week reminds Detroit that campaigning still is sometimes about doing what I say, not what I do.
Don’t these people have advisors? First we have Al Gore, preaching conservation and running up a huge electric bill. Then we have John Edwards preaching conservation while living in a 28,000 square foot mansion. Is it really too much for me to expect someone to walk the talk? Or maybe Obama’s advisors feel that he will get more votes with his Chrysler than he would by sacrificing a bit of comfort for some credibility on the environmental front.
Searching for a Bold Leader
On the theme of politics, Jesse Jenkins over at Watthead has published an open letter from Silicon Valley entrepreneur (he invented the optical mouse) and major political donor Steve Krisch:
In the letter, he challenges the leading Democratic candidates to pledge to a 30% reduction in greenhouse gas emissions by 2020. I strongly support such efforts, because this has the added benefit of lowering our oil consumption and stretching out our supplies. We need a long, gradual tail on the other side of the production peak in order to transition to a post-peak world without too much upheaval. If we peaked in the next few years and started to deplete at 5% a year, it wouldn’t be a pretty picture.