A quick follow up to my longish post on gas prices the other week. My buddy Chris forwarded me an article from The Motley Fool, which makes a few good points. First, gas prices are a market “problem” caused mainly by demand far outstripping supply. Second, political solutions are idiotic. I think this graph makes a good point:
Instead of recognizing this basic economic reality, our elected representatives are doing what they tend to do — pander to voters by misrepresenting their importance to the national economy through saying they’re going to “do something” about oil prices … or conversely, blaming the other side for not doing something. And let me be clear about this: The outcome would be nearly the same no matter who were in office. Democrat, Republican, Whig — it wouldn’t matter. Politicians say these things because no one has ever gotten elected by making certain that his or her comments hewed to economic reality. Taking credit for success you had no hand in causing is a tried and true staple in legislatures worldwide. Sadly, people believe it.
Unfortunately, there’s a lot of public support for the government to “do something,” and, unfortunately, our politicians are motivated more by getting votes than doing the smart economic thing.
Finally, high gas prices cause pain, but this pain is actually a good thing. As the article puts it, “Yes, high gas prices are horribly painful. But what that pain causes is the greatest outcome of the free market — incentive. Incentive to conserve, incentive to develop, and incentive to come up with (and switch to) alternatives like fuel cells and nuclear power.” Low gas prices are not going to encourage the development of new energy technology, lower fuel consumption, and smarter economic decisions. High gas prices are a stepping stone to a better, cleaner, more efficient future.