Monday, November 21, 2005

What's my number? 

Apparently windfall profits windbag Senator Byron Dorgan is getting mad at us economists. At Cafe Hayek, Russell Roberts quotes the senator:
There are a couple of economists writing in recent days�I won�t name them�who can tell us everything about the future but can�t remember their home phone number. You know the type. They are telling us what will happen here is if people can�t afford to pay the cost of energy, it will force them to conserve more. Easy to say for one of these economists who drive around town in their Volvo or Mercedes cogitating about the future.

As Roberts points out, the utility of a high price is not to encourage conservation but exploration and innovation. Doubters will take you to the peak oil debate -- will we run out of oil exploration? See this talk at AEI by another economist, James Hamilton, and this article from USA Today. But that misses the innovation and alternative energies side: See this from Business Week last May.