Oil Prices: Save us from the Senate
Yesterday's Senate grandstanding hearings about the causes and impact of increased oil, natural gas and gasoline prices in the wake of the hurricanes provided some disappointing but not surprising insights into why that body is exactly the wrong group to address the issue: an inability (or unwillingness) to grasp fundamental economic truths.
Witness this exchange between the Federal Trade Commission Chairman and the honorable senator from the great oil-producing state of Oregon:
‘‘That’s an astounding theory of consumer protection,’’ replied Sen. Ron Wyden, D-Ore.
One would hope that by referring to this conclusion as "astounding," the senator was implying that a door to understanding had been thrown wide open and he now saw the direct link between supply, demand and prices. One would probably be mistaken in this hope.
To the extent that interdiction of actual price gouging at the retail level can be achieved, the process is worthy. Price gouging -- the arbitrary setting of inflated prices with the primary purpose of profiting from a shortage of critical goods or services during a time of emergency -- is reprehensible. But the senators appear to be overreaching -- shocking, I know! -- by attempting to exert economic control all the way back through the supply chain, starting with the raw product coming out of the ground.
In light of those hearings, the irony of this becomes almost unbearable.
For a realistic take on what the Senate hearings are all about, you'd do well to see how our Australian mates view the process. In an article entitled "Big Oil takes Senate back to school," we get this insight:
But the chiefs of the biggest oil companies in the world helped expose what the show at the grand Dirksen Room of the Senate was all about - populist politics.
This is a complex issue and there will be no solutions created by the Senate, or anywhere else in the US, for that matter. But the ability of the Senate to make things much, much worse in the long run should not be underestimated.
Technorati tags: Oil and Gas Prices | Price Gouging | Windfall Profits Tax
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