Thank God For The Union Leader
My first reaction to reading this editorial in the NH Union Leader was “Thank God for the Union Leader.” Here’s the opening of the editorial:
MAYBE THE quickest way to lower oil and gas prices would be this: Immediately enroll every Democratic member of Congress in an entry-level economics class.
The lack of even a basic grasp of economic concepts has led Democrats to oppose sensible policies that would begin to lower oil and gas prices. Instead, they push hair-brained ideas that make no sense.
That’s the snarkiest way of exposing the foolishness (I could’ve said stupidity but I’m too gracious for that.) of the Democrats’ energy position. Last Friday, I read that Democrats had reversed themselves on drilling in Alaska. After checking this Reuters article, I realized that they were trying to play a fast one. Their plan was to open up more of the National Petroleum Reserve, located in the Brooks Range.
The reason behind this stunt is to allow Democrats to say that they aren’t really opposed to drilling. My question for them is simple:
If you aren’t opposed to drilling, why not tap into the huge known reserves of ANWR and the OCS?
I suspect that the only supply and demand principles that Democrats understand is that they won’t get their supply of campaign contributions if they don’t do as the environmentalist lobby demands.
Let’s be clear about something. The Union Leader’s opening is spot on. Democrats are campaigning on telling the American people that supply and demand aren’t what’s governing the price of oil. Fortunately, the American people know that that’s malarkey.
This nugget from the Union Leader editorial should be a daily reminder to GOP candidates and incumbents:
Any step Congress takes to produce a large increase in future supply, opening the outer continental shelf to drilling, for example, will reduce current prices. If there will be a lot more oil 10 years from now, a barrel of oil today loses some of its investment value, and its price falls.
As Harvard economics professor Martin Feldstein wrote in The Wall Street Journal on July 1, “Increasing the expected future supply of oil would also reduce today’s price. That fall in the current price would induce an immediate rise in oil consumption that would be matched by an increase in supply from the OPEC producers and others with some current excess capacity or available inventories.”
If there’s an announcement that we aren’t going to be held hostage to others’ actions, that we’re taking matters into our own hands, that’s the minute prices will start dropping. If Democrats want to keep insisting that supply and demand don’t matter, we’ll simply exploit that. We’ll simply make the case to the American people that it does matter. If we do that consistently, then I must agree with Sen. John Cornyn. Here’s what he said about pushing this issue:
Either the leadership wakes up and allows expanded development, in Alaska, outer continental shelf, shale, or I suspect Republicans are going to do a great deal better in this fall’s elections than most pundits now assume.
If you ask me, that’s a high price to pay for ignoring the realities of supply and demand. We should do everything we can to assist the Democrats pay that price.
Here’s another part of the editorial that I agreed with
The solution offered by Sen. Barack Obama and other Democrats: Impose a windfall profits tax on oil companies. But of course, that will do nothing to increase the supply of oil or reduce demand.
I’ve said it before and I’ll repeat it again: If you impose a tax increase on oil companies, doesn’t that make the price at the pump more expensive? Put differently, if you increase a company’s operating expenses, doesn’t that additional expense almost automatically make its way to the price of the product?
That isn’t a solution. That’s a gimmick that the Obamessiah hope works. He can’t truly be for a drilling solution after opposing that solution earlier. That’d make him look unprincipled, something that he’s likely loathe to do. Besides, he’d have a major uprising if he switched position on this issue. He can’t afford to anger the environmentalists.
That’s what happens, though, when you refuse to apply simple economic principles to solve economic woes.
Technorati Tags: Economics, Supply And Demand, Democrats, Obama, Jean Shaheen, Gas Crisis, Crisis of Choice, Oil Exploration, OCS, ANWR, Windfall Profits Tax, Election 2008
Cross-posted at LetFreedomRingBlog