David Henderson, over at EconLog, challenges Bill O’Reilly’s and Lou Dobbs’s comments on gasoline pricing and trade (and with a link to an EconLog post from December that I’d missed).
There are few combinations today as lethal to sensible economic commentary as self-righteous public scolds mixed with rising gasoline prices. Cato’s Chris Edwards quite rightly calls Nancy Pelosi’s allegation that “speculation” is causing recent gasoline-prices hikes “cartoonish.” Blaming rising prices on “speculation” (or on “profiteering” or “greed”) makes no more sense than blaming airplane crashes on gravity: just as gravity is always with us, so too is the desire of speculators, investors, business executives, and 10-year-old proprietors of lemonade stands for maximum profits. When prices rise something else must be going on, and it’s that something else that we must look to in order to understand why prices are rising. In the case of today’s rising prices at the pump that something else likely is the unrest in the middle east combined with an unusually harsh winter in Europe, growing energy demand in the developing world, and – let’s be clear – the administration’s own hostility to the oil and gas industry in combination with the rising likelihood that that administration will be in office until January 20, 2017. Also, I wonder if there’s been any change for the worse in a disturbing phenomenon described a few years ago by Andy Morriss. (And, I add here what I typically add in such discussions: when gasoline price fall – as they often do – do the likes of Ms. Pelosi and Mr. O’Reilly blame such price falls on the excessive greed of consumers?)