Capitalism Works, When Allowed

On the subject of high gas prices and the dog and pony show that Democrat senators put on in front of the leaders of the oil industry yesterday, a local columnist was chastising capitalism and these CEO’s with all the usual stereotypes and talking points that get the dumb masses riled. Things like these execs are robbing everybody and the title, ‘Capitalism at its finest.’ Hark! An educational moment has occured. Below was my reply to the writer.

Quick quiz: assuming a free economy, which is not the case in the U.S. as pertains to the oil industry, the most regulated and taxed industry on earth, but, in a free economy, if supply and demand are just a cliche as you say, then what or who really determines selling prices? Would you prefer that the government do that?

Do you think that increasing crude oil supply will lower the price at the pump? Its a trick question, but please answer it anyway.

“If they’re so worried about demand, how about this one.”

You didn’t see it did you? They’re not concerned with demand. They know, even if you don’t, that the demand will do nothing but increase as our population, both legal and illegal, continues to grow. My private-school education tells me that when demand outstrips supply, prices will go up. Isn’t that what you are seeing at the pump or is it all just going into Hofmeister’s pocket?

I appreciate your frustration with the high prices. All we need is an energy policy that gets some.

–end of reply

One of the highlights of the senate hearing was this response from John Hofmeister, president of Shell.

“The fundamental laws of supply and demand are at work,” said Hofmeister. The market is squeezed by exporting nations managing demand for their own interest and other nations subsidizing prices to encourage economic growth, he said.

In addition, Hofmeister said access to resources in the United States has been limited for the past 30 years. “I agree, it’s not a free market,” he said.

H/T Troy Moon for the inspiration.

related links:Troy Moon| Big Oil defends profits before irate senators | Don’t blame us for prices – oil execs

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