Friday, September 30, 2005


I have a feeling that the almighty crude-fuel is going to be the dominant issue of the coming months. Prepare to see proposals for price and allocation controls, windfall profit taxes on the oil and gas biz, tax abatements for the favored, and asinine charges of "gouging" from the political busy-bodies and demagogues in DC. My esteemed and economically dense governor here in GA has already chimed in on the issue to my own detriment. Tom Tanton at The Commons extols some of the virtuous effects of free market (high) prices and the market's magical ability to efficiently allocate scarce resources:

1) discourages tank topping, thus creating more effective supply; it discourages hoarding.

2) empowers consumers with optionality--the ability, the choice, of buying gasoline;

3) reduces gasoline lines, which waste fuel, wastes critical time during evacuation, and create unnecessary emissions (it is ozone season during hurricane season);

4) encourages conservation, where consumers see the real scarcity price and act accordingly (carpooling, etc.)

5) provides the correct market signal to refiners and other industry parties to eke out more supply in the short term and, longer term, increase total capacity.