From the NYT:
And some oil executives are now warning that the current shortages of fuel could become a long-term problem, leading to stubbornly higher prices at the pump.
They point to a surprising culprit: uncertainty created by the government’s push to increase the supply of biofuels like ethanol in coming years.
That’s only surprising if you know nothing about investing. Although I may not have said it here, I know I’m on record somewhere as predicting this. It doesn’t take a special skill to realize that increased uncertainty is going to lead to decreased investment.
Of course the NYT article has other amusing tidbits:
One guy is more or less saying “Duh, what did you expect to happen?” While the deputy secretary of energy says we need to two pronged approach even if the prongs fight against each other because “demand growth supports the need for investments in biofuels.” Although I have no idea why that support gross government subsidies for biofuels.
And it wouldn’t be an oil/gas article without quoting some idiot who talks about his bike:
Some consumers, meanwhile, are trying to drive less or are simply absorbing the higher cost. “I’m already driving the minimum,” said Dennis Zygnowicz, 51, of Garden City, Mich., who recently stopped at a Shell station and paid about $12 to put less than four gallons in his GMC Jimmy. “The only way I could do any less would be to ride a bike.”
There’s a whole lot of stupid in that article. I really like the “some consumers are driving less or aren’t.” It should be either “some consumers are driving less” or “of all consumers, some are driving less and most just don’t care.” Then we have Dennis, who of course is driving an SUV. Dennis is driving, as he says, “the minimum” before he admits that he could be driving less. Kudos to both the Times and Dennis.
Meanwhile, the Washington Times has coverage on the anti-gouging legislation that ends thusly:
“The bill represents an open invitation to ambitious state attorneys general to try their hand at suits against Big Oil,” says Iain Murray, senior fellow at the Competitive Enterprise Institute, saying the bill’s legal mechanisms would distort the market mechanisms that set gas prices in response to supply and demand.
“This is sheer populism and displays an outrageous ignorance of basic economics.”
Of course I agree, but I would say that the amount of ignorance of basic economics is unconscionably excessive.
Sources:
[NYT: Oil Industry Says Biofuel Push May Hurt at Pump]
[Washington Times: House OKs bill to curb gas gouging]
