Posted by: bridget | 30 May 2007

Wednesday Round-Up

Robert Samuelson opines that gas prices should be higher. Higher gas prices will lead to decreased energy consumption, which will, in turn, help to avoid more global warming.

The problems: high gas prices are partly caused by the difficulty of building new refineries (Arizona Clean Fuels Yuma may be the first new refinery in the US in thirty years). This amounts to a government-imposed monopoly on petroleum refining. The fact that oil companies earn a large profit off of this monopoly, without a quid pro quo to the public, should not be ignored. When the government grants various monopolies – from taxi cab medallion licenses to patents – the price of the restricted product invariably rises. In the patent sector, the duration of the monopoly is limited and the monopoly is granted in exchange for full, public disclosure of inventive art. There is no such time limitation nor quid pro quo in the petroleum business. There is no reason why gasoline companies should reap the benefits of such a monopoly; however, the obvious alternative, which resembles a socialist takeover of the industry, is also undesirable. If the government were to meddle in the industry, it should do so not by limiting supply (here, refined oil), but by limiting demand (such as by increasing the efficiency requirements of light trucks).

Samuelson assumes that there is a substantial elastic demand for oil-based energy. If there were, higher prices would result in lower usage. This would also have the effect of reducing the windfall profits of oil companies and negating the need for a tax on windfall profits or the like. Yet, most Americans have very little control over their gasoline usage. We drive a fixed distance to work, that cannot be changed unless we move; and public transportation is either available and feasible or unavailable and a nuisance. The people who can afford to buy hybrids have done so; those who cannot have no other options for reducing their gasoline consumption.

The lesson: don’t use free market principles when there isn’t a free market in question.

The NCAA has granted Duke lacrosse players an extra season of eligibility. Thirty-three of the players, who were not seniors during the rape case, will be able to play lacrosse at Duke or another school (if they transfer or pursue graduate work). Every president of Atlantic Coast Conference universities supported the extra season of eligibility to make up for the truncated 2006 season.

While this elephant thinks that the Duke players were more than a little tacky, she is happy that they were vindicated – as is just – and given an extra season of eligibility – as is fair.

The problem with southern California: this face is in New England. cj.jpg

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Responses

  1. So so true about the fuel prices. I read a similar essay a few days ago and just rolled my eyes. My husband and I live where we can best afford housing and we carpool to work. A new car would be nice, but it simply is not in our budget for a few months. Of course, we could be like the rest of Clark County and buy a house we cannot afford and lease a car we cannot afford…

  2. Kelly,

    Great point. It’s often those who cannot afford the high urban home prices who live far away from work. Gas prices will only depress “exurban” housing markets and elevate the markets in urban areas, which further exacerbates the disparity.

    (If you’ll permit a bit of snarking: funny how the “pro-environment” policy of the Left makes things really expensive for the working class.)

  3. “it should do so not by limiting supply (here, refined oil), but by limiting demand (such as by increasing the efficiency requirements of light trucks).”

    This assumes that truck manufacturerers are not already making the most efficient vehicles they can. Or that trade-offs between safety and efficiency, utility and effeciency, and useful life and efficiency should be decided by the government, not the consumers. Reduced utility or useful life may actually lead to more energy consumption in the long run. I have noticed in numerous other areas that the government never takes this into account.

    As usual I agree with the post. Anytime the government tries to help you should run for your life.

  4. I think I liked it better when he (Robert Samuelson) said last week (by stating the obvious to all but those on the left) that the Energy Price problem could be improved vastly if we opened up more acerage for drilling and he included Alaska in that point.

    I really like this idea better than letting prices rise to fight Global warming. …….. Next Stop Lauderdale

  5. […] was terrified of dogs as a small child.  Now, she’s the big sister to an adorable lab whom she’s yet to […]


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