Freedom's Fidelity

Monday, March 27, 2006

Great Thomas Sowell

Thomas Sowell on the absurdities of the oil companies being investigated for 'greed' and collusion:

After hurricane Katrina destroyed a lot of oil processing capacity around the Gulf of Mexico, there was — surprise! — less oil being processed. With less oil being supplied — surprise again! — gasoline prices rose.

However much economists rely on supply and demand to explain price movements, politicians need villains, so that the pols can play hero. Big Oil is a favorite villain and has been for decades.

There is nothing like the political melodrama of summoning oil company executives to televised hearings before some Congressional committee, where politicians can wax indignant at Big Oil's profits.

It so happens that Big Government takes more money in taxes out of a gallon of gas than Big Oil takes out in profits. But apparently somehow taxes don't raise prices. They certainly don't raise indignation from the politicians who voted for those taxes.

After the oil processing facilities were repaired and put back in operation — yet another surprise! — prices came back down. Supply and demand has been doing this for centuries but apparently the word has not yet reached some politicians.

And with world demand rising as a result of industrialization and growth in countries like China and India, the obvious antidote to high prices would be to increase supply.

But the very politicians who are noisiest about the high price of oil are the most bitterly opposed to increasing the supply.

Drilling for more oil might disturb some animals or birds or fish. Worse yet, on a clear day people with beachfront homes might be able to see an offshore oil rig out on the horizon.

Even those who can't see oil being drilled in some isolated hinterland in Alaska would know that the drilling was going on, and that would upset their sensitive natures.

He gets less charitable, and more entertaining from here. Read the rest.

posted by Paul  permalink | |