Ben Franklin Oil
January 7th, 2008 by Peter SudermanWhat to make of $100 oil? To read the daily newspapers on the topic, or listen to certain political candidates, you’d think it was an Earth-shattering event.
Here’s the Times with a story headlined “How $100 oil will change your life.” John Edwards said that the “report that the price of oil has reached $100 a barrel is just another example of how corporate greed is squeezing the middle class.” And the Houston Chronicle leads its story on the milestone by saying that “U.S. consumers are likely to feel the sting of $100 oil soon, and in perhaps more ways than they realize.”
Oil prices have indeed risen sharply over the last few years. But the $100 mark itself hardly a cause for alarm: triple digit prices are merely what Cato’s Jerry Taylor calls a “purely psychological barrier.” I’ll let him take it from here:
The $100 threshold is purely psychological and holds little import to the market. The macroeconomy is hardly more affected by $100 oil than it is by $98 oil. Likewise, the great public hunt for the “tipping point” at which oil price increases induce significant changes in consumer behavior is akin to Captain Ahab’s hunt for Moby Dick. Since oil prices began their run up in 2003, demand has remained relatively strong and consumers have responded far less robustly than they did during the price run-up from 1975-1980.
He goes on to point out that, if consumers want to reduce their oil usage (and thus energy costs), it’s not as if they’re without options. Meanwhile, CEI’s Myron Ebell explains that, if there really was serious concern about high oil prices, Congress has plenty of options to increase domestic oil production that it’s not using (though it should).
Even more importantly, that $100 figure is, basically, bunk. Megan McArdle notes that, for all practical purposes, the $100 trade was just a stunt.
January 7th, 2008 at 7:11 pm
LOL! Ah, the “let them eat cake” arguement for oil prices…too funny. Maybe we should cap oil prices at $99.95/barrel.
Oil prices are going nowhere but up in the long run from here on out because of our destabilizing the Middle East, the fact that we’ve past (IMO) “Peak Oil”, and we are doing almost nothing to curb the demand for (or increase the supply of) oil in this country. Everytime I fill up my gas tank at my local gas station (and I just paid a record $50+ to do that recently), I always say out loud or to myself…”Thank God we’re in Iraq”…it’s done us oh-so-much-good, hasn’t it?
January 9th, 2008 at 7:44 pm
What they don’t tell you is that the 3 dollar a gallon gas price amounts to a 2 dollar tax at the pump. Bushonomics at work. Devalue the dollar till it is crap. Protect the house of Saud. Give the greedy Sheiks more and more of our dollars and protect them for free. What a deal for the financiers of 9 11. And no there aren’t many options, too many years of GOP control and bailing out automakers for incompetence and lack of imagination have left us with a choice between which gas guzzler to buy. CAFE standards have only now been upped. Too late.
I saw a pro war bumpersticker that said “Kick their ass, take their gas”. How’s that working out for you?
January 10th, 2008 at 1:38 am
I laughed when I heard Huckabee say recently that he was for a $1Billion reward for the first person to come up with an auto that gets 100 miles/gallon. What he doesn’t realize is that a guy in CA came up with just that (a car that produced absolutely NO emissions and got that amount of gas mileage at least 15 years ago) and then the big 3-4 auto companies bought up his patent/designs and we never heard of it again.
Who killed the electric car (there was a movie entitled that recently)?? Electric cars were wildy popular and sucessful out west (CA even had some infrastructure built to charge the cars publically while you were out and about), and then the auto companies that made them wouldn’t allow anyone to buy them (lease only…and they destroyed them all after the leases were up!).
Brazil is ahead of the USA in terms of alternate fuels for trucks and autos for Christ’s sake!! Get real people…
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