Friday, October 20, 2006
Gas price nitwittery
National Review's Rich Lowry recently penned a short article on gas prices with the following subtitle: Down are gas prices; out is a Democratic talking point. Oh, if only that were true.
Democrats harped for months about high gas prices, blaming President Bush's supposed coziness with oil executives for prices that topped three dollars a gallon in some places. Now that gas prices are plunging, you'd think Democrats would be happy. Well, they ain't. Democrats are now accusing the president and Big Oil of manipulating prices in order to influence next month's congressional elections. Wannabe senator Claire McCaskill (D-Missouri) said as much during a recent debate:
Just look at the gas prices. Look at the manipulation of the gas prices. I'm not sure anybody ... believes these gas prices are going down for any other reason than that we're having an election. I'm sure that most people know they're going to go right back up after the election's over.
Closer to home, the Nashville Today tabloid published a rant from an anonymous nitwit who sounds like a less eloquent (if that's possible) Claire McCaskill:
It seems awfully strange that suddenly gas prices are going down and the elections are coming up. I don't really understand that. I bet the gas will go sky-high after the elections. I believe it. The gas prices are all a political maneuvering by our politicians who are involved with the oil companies. I think that we need to figure it out. We need to study that. Something needs to be done and somebody needs to find out.
Anyone who suggests that gas prices have been falling because of political manipulation is displaying economic ignorance of the first order. As any first-year economics student will tell you, the price of crude oil is easily the most significant factor in determining gasoline prices. Crude oil is a publicly traded commodity that is susceptible to market fluctuations. For the past year and a half or so, crude oil contracts on the commodities exchanges trended upward due to perceived supply disruptions caused by turmoil around the world, i.e., the ongoing confrontation with Iran, political volatility in Venezuela and Nigeria, major hurricanes in areas in which the majority of the United States' refineries are located, etc. As certain world tensions eased, so did the price of oil.
Let's also not forget that prices have historically risen in the spring and summer in anticipation of increased travel through the Labor Day holiday. (Gas prices reached record territory in late summer 2005 and 2006.) Some will say that this is yet another example of oil companies taking advantage of American consumers. On the contrary, basic economics tells us that prices rise when demand increases. The laws of supply and demand are no different for gasoline than they are for other consumer goods.
Each and every time there's a "gas crisis" in America, Congress (Democrats, mostly, with a few Republicans who should know better thrown in for posterity) perp-walks oil executives through various committee hearings in an effort to prove that a conspiracy is afoot. This charade takes place on an almost yearly basis, and members of Congress are always forced to admit that, yes, the laws of supply and demand determine what consumers will be paying for a gallon of gas.
I'm sure most Americans believe that gas prices - nay, all prices - are determined by a cabal of corporate CEOs. Again, such thinking reflects gross economic ignorance. If each and every citizen were forced to complete a course in basic economics, we'd not have to listen to the likes of Claire McCaskill and Mr./Ms. Something Needs To Be Done again.
Democrats harped for months about high gas prices, blaming President Bush's supposed coziness with oil executives for prices that topped three dollars a gallon in some places. Now that gas prices are plunging, you'd think Democrats would be happy. Well, they ain't. Democrats are now accusing the president and Big Oil of manipulating prices in order to influence next month's congressional elections. Wannabe senator Claire McCaskill (D-Missouri) said as much during a recent debate:
Just look at the gas prices. Look at the manipulation of the gas prices. I'm not sure anybody ... believes these gas prices are going down for any other reason than that we're having an election. I'm sure that most people know they're going to go right back up after the election's over.
Closer to home, the Nashville Today tabloid published a rant from an anonymous nitwit who sounds like a less eloquent (if that's possible) Claire McCaskill:
It seems awfully strange that suddenly gas prices are going down and the elections are coming up. I don't really understand that. I bet the gas will go sky-high after the elections. I believe it. The gas prices are all a political maneuvering by our politicians who are involved with the oil companies. I think that we need to figure it out. We need to study that. Something needs to be done and somebody needs to find out.
Anyone who suggests that gas prices have been falling because of political manipulation is displaying economic ignorance of the first order. As any first-year economics student will tell you, the price of crude oil is easily the most significant factor in determining gasoline prices. Crude oil is a publicly traded commodity that is susceptible to market fluctuations. For the past year and a half or so, crude oil contracts on the commodities exchanges trended upward due to perceived supply disruptions caused by turmoil around the world, i.e., the ongoing confrontation with Iran, political volatility in Venezuela and Nigeria, major hurricanes in areas in which the majority of the United States' refineries are located, etc. As certain world tensions eased, so did the price of oil.
Let's also not forget that prices have historically risen in the spring and summer in anticipation of increased travel through the Labor Day holiday. (Gas prices reached record territory in late summer 2005 and 2006.) Some will say that this is yet another example of oil companies taking advantage of American consumers. On the contrary, basic economics tells us that prices rise when demand increases. The laws of supply and demand are no different for gasoline than they are for other consumer goods.
Each and every time there's a "gas crisis" in America, Congress (Democrats, mostly, with a few Republicans who should know better thrown in for posterity) perp-walks oil executives through various committee hearings in an effort to prove that a conspiracy is afoot. This charade takes place on an almost yearly basis, and members of Congress are always forced to admit that, yes, the laws of supply and demand determine what consumers will be paying for a gallon of gas.
I'm sure most Americans believe that gas prices - nay, all prices - are determined by a cabal of corporate CEOs. Again, such thinking reflects gross economic ignorance. If each and every citizen were forced to complete a course in basic economics, we'd not have to listen to the likes of Claire McCaskill and Mr./Ms. Something Needs To Be Done again.
# posted by Joltin' Django @ Friday, October 20, 2006 
