American Elephants

Friday Morning Links: by The Elephant's Child

Michael Barone explains the weakest part of our political system—the presidential nomination process.  It’s not coincidental that it’s the part of the federal system that finds least guidance in the Constitution.

Investors Business Daily says the Democrats are simply not serious about the high price of gas. They have reverted to their worst and silliest ideas and claim them to be  a fresh new set of policies

The Japanese were remarkably well-prepared for a devastating earthquake. Many said that although Tokyo got a good shaking, there was little damage.  It was the tsunami that caused the devastation. The last “Big One” was the Great Kanto Earthquake of 1923. The Atlantic has a photo gallery of that 7.9 earthquake, and the damage is unbelievable.

Christine Russell is an award-winning science writer, and president of the Council for the Advancement of Science Writing. She offers a clear explanation of the unfolding situation at Japan’s nuclear plants in “10 Critical Questions About Japan’s Nuclear Crisis.”

—A moving story of the Wisconsin Assembly’s Bold Leap and legislators doing the right thing under very difficult circumstances, and why they did it, in spite of the hundreds of protesters screaming outside.

Eight more states are following Wisconsin’s Governor Scott Walker’s lead, and reforming the relationship between the government and public-sector unions with new laws protecting workers from union control and fund-raising.



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From Investor’s Daily:

Second, by driving prices higher in today’s market, speculators help prevent shortages at a later date. If they aren’t affecting today’s prices by weighing the future, then the current price signals can’t encourage consumers to self-ration. Without those signals, they will draw down the supply to dangerous levels.

Nicely put. I’m going to bookmark that one. I get sooooo tired of the messengers (speculators) being blamed for the message (rising commodity prices).

If the Democrats … truly wanted to bring down gasoline prices, they’d get behind a strong drilling policy. Certain that future supplies will be higher, the market would respond with lower prices today.

I think that point can be easily exaggerated. The U.S. domestic price for petroleum reflects the world market price. While every addition to supply matters, the effects of increased U.S. drilling on the world situation would be pretty minor, and output would not kick in for several years.

There may be other arguments for allowing drilling in more places (e.g., keeping more of the rent from oil sales in the country rather than flowing to overseas producer), but providing short-term relief for gasoline prices is the least convincing one.

However, if you truly believe that producing more now will have a marked effect on domestic oil prices, then the relationship in the first quote applies, just the other way around. By pulling more out of the ground now, domestic resources will be depleted sooner. Thus by driving prices lower in today’s market (and sending a comforting signal to consumers, who accordingly will conserve less), shortages are more likely at a later date.


Comment by Subsidy Eye

Let’s say that the Administration says that they are removing the bans they placed on drilling, and will issue permits promptly, and they expect our oil and gas production to rise significantly. They also say they want the corporate tax reduced to 12% at once, and they will review regulations carefully and promptly to see that they are efficient and only what is necessary for proper safety. Would there be an effect on the oil futures price? Read up on Julian Simon.


Comment by The Elephant's Child

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