One Cure for High Gas Prices is Worse than the Disease

Most people want the government do to something about the high prices of gasoline, but I am not one of them.

Here’s a rerun from 11 months ago: “We know what it takes to get the price of oil down to $40 a barrel.  It takes a global depression. It takes losing 500,000+ jobs a month in the U.S.”

I said this months ago, and it’s still true today. I won’t advocate for an economic recession so we can have lower gasoline prices.

Matt Y points out a good way to think about this is to imagine a Senator saying “I want to make gas cheaper by creating mass unemployment.

 We could use monetary policy to lower gasoline prices. But once you find out the details of what would actually need to be done to lower prices, nobody but Beelzebub himself could be in favor of the plan.

Of course, there are other cures – like finding a miracle source of energy which comes from almost nothing.

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Expert in business development, product development, and direct marketing. Developed strategic sales plans, product innovations, and business plans for multiple companies. Conceived the patent pending Spot Equivalent Futures (SEF) mechanism, which allows true replication of spot and swap like products in the futures space.

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Госбанк
4 years 3 months ago

JJ
drilling?

Today, the realistic alternative to fossil fuel is nuclear power generation. However, in this country, any meaningful work on improving safety, efficiency and reliability of the nuclear plants was stopped about 20 years ago by the joint efforts of the “progressives”, “regressives”, and the badly educated populace. Instead, we create synthetic CDOs, Facebook, and “social networking” all of which is supposed make our lives better.

Speaking of progressives, the Massachusetts variety has successfully managed to block wind turbines construction on the Nantucket Sound for 10 years using hypocritical reasons such as migratory bird deaths, danger to the adjacent airfield, Indian sacred tribal grounds, etc whilst the real reason was that the beautiful views from their mansions might be marred by the gigantic rotating propellers. “Green energy” is good, but not in my backyard.

Speaking of nuclear energy, France generates 75% of its electricity through nuclear plants. Think about it.

Germany, on the other hand, is a different story. Perhaps, its population education level is approaching this country’s. Who knows ?

Guest
JJ
4 years 3 months ago

The major issue for the US populace is petrol prices (for their vehicles)

Guest
JJ
4 years 3 months ago

drilling?

Member
4 years 3 months ago

Am I correct in assuming that MMR would never advocate price controls? It seems simple enough to show that if price is forced down by laws that supply does not equal demand. Basic economics, right?

Guest
beowulf
4 years 3 months ago

Depends how the controls are administered. The default option of course is the market system, which rations by price. The govt can choose to ration by other criteria. There may be good or bad reasons to do so (I don’t think Uncle Sam had any choice but to ration gas during WWII or, for that matter, draft men into the army; we may yet have to do both again someday). The real problem is, as PJ O’Rourke once put it, anytime Congress steps in to control the buying or selling of anything, the first thing to be bought and sold are Congressmen.

I’m a fan of Marty Feldstein’s tradeable gasonline rights– and on a broader scale, Bill Vickrey’s market anti-inflation plan because they allocate resources on an open cap and trade market instead of by congressional earmark.
That presupposes, of course, that the govt has demonstrated a legitimate need to jump into a market with both feet. As a general rule, I agree with what Arthur Plumbtre said was Keynes’s goal, “to devise the minimum government controls that would allow free enterprise to work.”

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