"We Can Lower Oil Prices Now"
Martin Feldstein in todays WSJ explains why taking action on the supply side of oil - note the word "action", not immediate oil availability, but just "action" towards future increases in supply - will IMMEDIATELY lower the price of oil.
I suggest you read the article slowly, three times, to fully absorb the economics - it reminded me of the texts I used to suffer through obtaining an Economics degree - so you understand how the pricing of commodities work. Oil will not be the only problem with the rapid growth in China, India and elsewhere!
I suggest you read the article slowly, three times, to fully absorb the economics - it reminded me of the texts I used to suffer through obtaining an Economics degree - so you understand how the pricing of commodities work. Oil will not be the only problem with the rapid growth in China, India and elsewhere!
Labels: Economics
posted by Jim | 10:50 AM
2 Comments:
I note that the article mentions both 'supply increase' and 'demand decrease' policies as having the effect of driving prices lower (than they would otherwise be).
While some supply increase actions, such as drilling ANWAR, are possible, I suspect that demand decrease in the U.S. has more potential to move prices. One could certainly argue that now would be a good time to implement a new gas tax (best as a replacement of some other income tax, I'd say), that would promise to decrease demand (and rather than telling Detroit how to make cars, give them plenty of incentive to build in more efficiency).
Likewise moves by China and India to remove remove their current subsidies from would certain destroy demand (but may have many other unpleasant consequences for us and them). It's hard to see where all the chips would land!
Social Engineering by taxation will not work. Let the market work - it has given us "100%+ tax" over the last year or so - a lot more than our government could ever do, and demand will decrease with price following.
Problem is the Dems - and I suspect Sustainability promoters - will not let us increase supply! Let's do both, and over time we will find alternatives. History shows this is true. Why not continue to use a proven method?
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