Monday, August 14, 2006

You can learn economics from a PiPress editorial 

Commenting on the Mike Hatch proposal for an energy czar for Minnesota , the paper encourages economic education:
If we might humbly petition, we suggest the energy czar:

� Review the laws of supply and demand and remind visibly aggrieved politicians of the increased worldwide demand for oil that must be the starting point for any discussion of energy policy. One doesn't solve a supply problem with grandstanding and artificial efforts to reduce gasoline prices � efforts that actually increase demand and make the problem worse.

� Call out politicians by noting "windfall profits," "price gouging" and "Big Oil" conspiracy sound bites are not policy. Oil is a commodity, and price and profits fluctuate more rapidly in response to market conditions than policymakers can react. Attempts to punish companies for short-term profits are a disincentive for increasing oil exploration and gasoline production, don't help consumers and yes, make the problem worse.

(Dirty little secret: the past 25 years, state and local governments have collected $2.2 trillion in gasoline taxes, more than three times oil company profits.)

� Point out that boutique blends of fuel, such as a 20 percent ethanol mandate, mean higher refining costs and hinder the ability of suppliers to move surplus supplies to areas of regional shortages. Surprise, that makes the price problem worse.
Somewhere Moffitt fumes...