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Comments from an AP history
and government teacher in Raleigh, NC.
e-mail betsynewmark AT gmail.com
Commissions earned from selling items through Amazon will go towards buying materials for my classes. Thank you.
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Friday, April 28, 2006
Dr. K. Tries to Instruct People in the Laws of Supply and Demand
It is so futile to try to bring some rationality to the discussion of gas prices. Republicans are as deceptive as Democrats on this. If people understood a little economics, they would realize what is going on. Charles Krauthammer has a very clear column today that explains it all in very simple terms so maybe even the politicians can understand it. I wish that everyone could read what he's written and understand that the explanation isn't that complicated. Demand is up as China and India get more and more industrialized. Americans are driving big, honking SUV's that use a whole lot more gas than other vehicles. Supply is down for a variety of reasons. Some reasons we can't do anything about. People are worried about Iran and that affects prices. But a lot of the problems this season is coming from actions that the government has taken despite all warnings of what would result.Start with supply disruptions in Nigeria, decreased production in Iraq, and the continuing loss of 5 percent of our national refining capacity because of damage from hurricanes Katrina and Rita. Add to that the mischief of idiotic new regulations. Last year's energy bill mandates arbitrary increases in blended ethanol use that so exceed current ethanol production that it is causing gasoline shortages and therefore huge price spikes.Read the rest of his column. Then explain it to all your friends at the water cooler.
Why don't we import the missing ethanol? Brazil makes a ton of it, and very cheaply. Answer: the Iowa caucuses. Iowa grows corn and chooses presidents. So we have a ridiculously high 54-cent ethanol tariff and ethanol shortages.
Another regulation requires specific ("boutique") gasoline blends for different cities depending on their air quality. Nice idea. But it introduces debilitating rigidities into the gasoline supply system. If Los Angeles runs short, you cannot just move supply in from Denver. You get shortages and more price spikes.
And don't get me started on the missing supply of might-have-been American crude. Arctic and outer continental shelf oil that the politicians kill year after year would have provided us by now with a critical and totally secure supply cushion in times of tight markets.
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It is so futile to try to bring some rationality to the discussion of gas prices. Republicans are as deceptive as Democrats on this. If people understood a little economics, they would realize what is going on. Charles Krauthammer has a very clear column today that explains it all in very simple terms so maybe even the politicians can understand it. I wish that everyone could read what he's written and understand that the explanation isn't that complicated. Demand is up as China and India get more and more industrialized. Americans are driving big, honking SUV's that use a whole lot more gas than other vehicles. Supply is down for a variety of reasons. Some reasons we can't do anything about. People are worried about Iran and that affects prices. But a lot of the problems this season is coming from actions that the government has taken despite all warnings of what would result.
0 comments
It is so futile to try to bring some rationality to the discussion of gas prices. Republicans are as deceptive as Democrats on this. If people understood a little economics, they would realize what is going on. Charles Krauthammer has a very clear column today that explains it all in very simple terms so maybe even the politicians can understand it. I wish that everyone could read what he's written and understand that the explanation isn't that complicated. Demand is up as China and India get more and more industrialized. Americans are driving big, honking SUV's that use a whole lot more gas than other vehicles. Supply is down for a variety of reasons. Some reasons we can't do anything about. People are worried about Iran and that affects prices. But a lot of the problems this season is coming from actions that the government has taken despite all warnings of what would result.
Start with supply disruptions in Nigeria, decreased production in Iraq, and the continuing loss of 5 percent of our national refining capacity because of damage from hurricanes Katrina and Rita. Add to that the mischief of idiotic new regulations. Last year's energy bill mandates arbitrary increases in blended ethanol use that so exceed current ethanol production that it is causing gasoline shortages and therefore huge price spikes.Read the rest of his column. Then explain it to all your friends at the water cooler.
Why don't we import the missing ethanol? Brazil makes a ton of it, and very cheaply. Answer: the Iowa caucuses. Iowa grows corn and chooses presidents. So we have a ridiculously high 54-cent ethanol tariff and ethanol shortages.
Another regulation requires specific ("boutique") gasoline blends for different cities depending on their air quality. Nice idea. But it introduces debilitating rigidities into the gasoline supply system. If Los Angeles runs short, you cannot just move supply in from Denver. You get shortages and more price spikes.
And don't get me started on the missing supply of might-have-been American crude. Arctic and outer continental shelf oil that the politicians kill year after year would have provided us by now with a critical and totally secure supply cushion in times of tight markets.
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