Political pandering about energy
I’m in a bit of ranty mood this morning … read on for knee-jerk reactions that may or may not make any sense or be of any value.
I found myself watching cable news this morning* and Hillary was talking about rising gasoline prices. Here’s a few highlights of what she said:
1) She wants to make oil companies pay federal gas tax (as opposed to suspending the tax as McCain proposes). Yeah, right. Like there’s any chance that measure could even get in the hopper, much less passed in the next month. Even if something like this happened, it would take a year or so of debate. It’s populist pandering … “hey, look at me, I hate large corporations just like you!”
2) She wants congress to start serious investigations into why gas prices are rising. Huh? Is there a crime here? What is it? Actually, maybe they should investigate … then they can educate the public about economics how much they actually consume. Oh wait … it’s not the public’s fault … must be somebody else’s.
3) She is convinced energy traders are driving up price of oil. I’m not sure what she’s getting at with that. She said it with such aggressiveness and disdain – with an implication that there is some diabolical scheme underfoot. If we look at the plain words of the statement – well, yes, the day-to-day actions of energy traders does impact the price of oil. It’s a commodity like any other. What exactly is your point, Hillary?
4) Then she said that we (i.e., America) should release oil from the SPR (Strategic Petroleum Reserve) to send a message to oil companies and OPEC that we’re serious. What the hell does that mean? Who is serious and what are they being serious about? What’s the message?
Pure political pandering. Yawn.
You know what America? Gas prices are high? I’m sorry, but tough shit. Stop buying so much of it!! It’s supply and demand – it’s not that difficult to understand. The rest of the world seems to understand this equation.
Call me a cynic, but real changes in our energy situation will only come when people start feeling it economically. I think things are starting to happen – GM has seen a 27% drop and Ford a 36% drop in SUV sales and a huge increase in sales of smaller/hybrid cars since last year (I don’t have a link for those numbers, the TV people said it as I write this). The map below (from this article) also shows a nationwide decrease in driving. Did people decide that taking the bus or carpooling was the “right” thing to do? Maybe some of them did, but I would guess that most are trying to save money.
At this point, maybe you’re saying to yourself “but this happened in the 70s, everybody started buying smaller, more fuel-efficient cars…but, then prices went back down and the trend reversed”. That’s true. Will that happen again this time? I don’t know, perhaps. A lot depends on what OPEC decides to do … their hand on the global oil faucet is what contributed to a lot of what happened in the early 1970s. I’m no energy expert, but it seems to be fundamentally different this time.
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* I rarely watch the 24-hour cable news channels. I am not at all surprised with the rising anti-intellectual sentiment in this country. They are so patronizing – treating the viewer as a complete and utter idiot. Hey, if you can’t follow the basic news of the country and world, tough. You treat people like children and apathetic morons … then, that’s what they become.
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Clastic Detritus 
My college econ prof (in the 80’s, when we all remembered high oil prices) used the collapse of the high oil prices as an example when talking about cartels and about elastic vs inelastic markets. His explanation was that oil consumption was very inelastic in the short term – people needed a certain amount of fuel oil to heat their homes, and a certain amount of gasoline to fuel the cars they owned, and so forth. That meant that demand was not very sensitive to changes in prices, which meant that it was possible to raise prices quite a bit without decreasing consumption. That made it easy for OPEC to increase prices and make a lot of money.
Over the longer term, however, oil consumption is much more elastic. People buy smaller cars, insulate their homes, buy new windows, and so forth. It wasn’t as easy to make more money by raising prices, because people would simply buy less.
The cartel fell apart partially because the separate members had an incentive to cheat – they could make more money by selling more oil than they had agreed to. (Non-OPEC discoveries, like the North Sea fields, probably also helped weaken OPEC, because they didn’t participate in the price-setting.)
As far as I can tell, what we’re in right now is real, the result of diminishing supplies and immense demand, from the developing world as well as from the US.
“As far as I can tell, what we’re in right now is real, the result of diminishing supplies and immense demand…”
Yeah, I agree.
I thought I was the only person that felt that the media and the TV news programs in particular, were dumbed down to the point that they are no longer capable of communicating an understand of even the most basic occurrence in the world. It is frightening!
I would presume that if [most] newspapers are written for an 8th-grade reading level, that TV news programs do something similar!
Amen to that, and kudos to Obama for not following McCain & Clinton’s absurd lead. I never watch TV news, as it is so sound bite driven and shallow. Not that newspapers are much better. An ornithology teacher of mine once said “given the number of mistakes in the newspaper in articles on subjects about which I am an expert, why should I think that articles on other subjects are any more accurate?”
Adam … I am also glad Obama called their bluff, so to speak … I’m also glad that most Americans think the whole Rev. Wright thing is a non-issue … even though the media loves to talk about it every moment of every day.