…and not just because my recent investment in oil futures depends on the price continuing to rise.
The sudden upsurge in the price of gas has been the top news story for the past few weeks, and there doesn’t seem to be any relief in sight. Oil is a finite resource, and as China, India and other developing nations have… well… developed, the worldwide demand for oil has shot up. As Americans turn to the government – and the three people campaigning to be the next president – for a solution, it seems amazing that no one saw this coming.
Of course the US leads the rest of the planet by a long shot when it comes to oil consumption, thanks to a combination of massive suburban sprawl, the popularity of gas-guzzling SUVs and a system of government subsidies that keeps our gasoline cheap compared to the rest of the world.
Progressives have lobbied the government for years to raise the mandatory average fuel-efficiency requirements of American cars, and the government’s response over the last eight of those years – especially from that bunch of oilmen in the executive branch – has been predictably dismissive.
The normal Republican philosophy regarding such things is to let the market take care of it. Keep the government out of it, they say. In an ideal world, I totally agree. The government is bloated and slow and bad at getting things done. In reality though, the problem with the Republican hands-off philosophy is that Republicans are totally disingenuous about it.
If the real price of gasoline was actually reflected at the pump, then people would stop using gasoline simply because they couldn’t afford it. People would stop buying gas-guzzling behemoths in favor of smaller cars. People who work in cities would stop moving into houses way out the suburbs, and people who already live in the suburbs would start carpooling or taking public transportation (if it’s even an option). That’s the market at work. We know the market would do its thing because it’s exactly what happened in the past when gas prices shot up for any length of time.
And it’s happening again. Even the modest rise we’ve seen over the past year or so – and it has been modest for Americans, no matter what it feels like – has sent a surge of riders to mass transit, according to this recent article in the New York Times. The difference this time is that given what’s happening with China, India and much of the rest of the developing world, oil prices aren’t likely to level off again… ever.
The bottom line here is that the Republican philosophy works. We just need the courage – yes, courage – to let the market actually do its thing.
Of course there’s another part of me – the part that loves to travel – that’s afraid to see what all this will do to air fares.
2 Replies to “Here’s to the high price of gas…”
Methinks the “market will correct itself” is the slogan of Friedman / Neo-conservative economics and not directly part of the Republican philosophy. Neocons are Republicans, but not necc. vice versa. I could be wrong–and I usually am.
The problem with the free market model is that it is being manipulated by traders. The run up in oil and gas prices is not supported by cost or short or mid term demand. That said, as the run up in price (as contrasted to cost) is not supported by the underlying economics, it should bust at some point. Or, my one class in micro economics has not served me well.
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