Tuesday, January 16, 2007

Oil Politics - The Complaint Laffer Curve

Does anyone else think the falling price of oil is more of a political move on the part of oil producers (both foreign and domestic) to keep America suckling on their oil wells? When sweet crude rose to $80 a barrel, pump price was the number one thing on people's minds. The media was blaming George Bush (if anyone is to blame, shouldn't it be Adam Smith?) for America's oil dependency and there was a lot of saber rattling about "alternate energy" and "hybrid cars" (which sacrifice CFCs for throwing huge, toxic batteries into our landfills 10-20 years out from now). Now that oil prices are back down to just over $50 a barrel, no one is praising our current administration (if it's their fault when it goes up, shouldn't they be culpable for the price going down?) and everyone is out buying their Escalades again. OPEC countries have now found the price at which the American consumer will buy gas and not pressure Washington to change our energy policies (a sort of "Complaint" Laffer Curve). We, as individuals, don't have the monetary fortitude to not spend money on things when we think they are too expensive. This is the reason credit cards are so widely used today and why last year was the first year in quite a few where Americans spend more than they made. Our Government, however, does think it knows what's best for us. If we scream about oil prices long enough, they will get off their butt and do something to counter the invisible hand of capitalism by either doing something to make gas even more expensive (profit windfall taxes) or something that will cost us even more money in taxes (government oil subsidies). The American consumer has the same memory of the stock market: none. We don't care what happened yesterday, only what's happening today and maybe what will happen tomorrow. As long as I'm not paying more than $X.00 per gallon of gas, I don't care that we're moving our country into an unfavorable economic position. Afterall, last I checked, the Sun didn't charge us for light, nor the Earth for wind.

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