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Buy Low, Sell High

Here’s a letter to BusinessWeek.com (HT to Dave Bieler):

Reporting on environmentalists joining with U.S. utility companies and manufacturers to oppose the export of American natural gas, you quote coalition member T. Boone Pickens: “Why let our foreign competitors take advantage of our cheap energy?” (“Strange Bedfellows Debate Exporting Natural Gas,” Aug. 22).

Mr. Pickens might be a fine businessman, but he’s a lousy economist.  Natural gas is inexpensive in America because we can produce gas at lower costs than can producers located abroad.  Therefore, Americans can profit by selling natural gas to foreigners.

Such is the key to economic success: sell what you produce at relatively low costs and buy what you can produce only at relatively high costs.

Just as Jed Clampett would have remained a poor mountaineer had he refused to sell the abundant oil beneath his property – had he reserved that energy for the exclusive use of the Clampett family – Americans would be poor if we accepted Mr. Pickens’s premise that we are somehow harmed when we export those products that our geography, technology, and economic institutions allow us to supply in great abundance and profitably sell to foreigners.

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA  22030