Richard McKenzie offers to the White House some basic economics lessons about oil prices. A slice:
When the Biden administration took over on January 20, 2020, it immediately began a “war on fossil fuels” under its green agenda, heavily weighted toward substantially reducing U.S. greenhouse gas emissions. One of President Biden’s first acts was to terminate by executive order construction of the Keystone XL pipeline. He wrote, “Leaving the Keystone XL pipeline permit in place would not be consistent with my administration’s economic and climate imperatives.”[ii]
What Ms. Psaki and the President have overlooked is that termination of the pipeline construction reduced the anticipated domestic and global supply of oil in the future and, therefore, increased future oil prices above what they would have been (as economists Dwight Lee and David Henderson argued years ago[iii]). The hike in anticipated future prices likely caused producers in the United States and around the globe to hang on to their current oil reserves in anticipation of higher future profits. They can do this by reducing their current and future drilling, leaving their easily accessible known reserves in the ground, and holding on to a greater fraction of their stored output.
The resulting domestic and global market outcome from the pipeline cancellation? Higher current gasoline prices than Americans (and everyone else) have faced since President Biden first occupied the Oval Office.
If the Biden administration announced a restart of the Keystone pipeline, oil producers would reverse their thinking, because anticipated future oil prices would fall with the greater future supply at lower cost, which can be expected when the Keystone becomes operational. This means they could anticipate that they future profits would fall below levels previously anticipated. Producers could be expected to increase current market supply drawn from reserves, which would put immediate downward pressure on the current price of gasoline at the pump.
Scott Sumner exposes some of the flawed reasoning of industrial-policy advocates.
Dan Mitchell rightly applauds states that cut taxes.
Eric Boehm decries the Congressional Progressive Caucus’s disdain for the role of Congress. A slice:
Every member of the progressive caucus in Congress is, by definition, a member of Congress capable of writing and introducing legislation. If these lawmakers want to see changes to existing laws like the Affordable Care Act or want to create more laws to limit gas drilling, abolish student loans, or change the immigration system, they should work with their colleagues to pass those pieces of legislation.
The executive branch does not exist so ideas that cannot get the requisite votes in Congress can become national policy anyway. This is exactly backward. Presidents are supposed to take their agendas before Congress to get approval or denial by the representatives of the American people. Isn’t that the whole point of the State of the Union dog and pony show we had to sit through last month?
“It’s a sad commentary on our current Congress that its members would invite and even urge the executive branch to arrogate legislative power to itself,” writes David Boaz, executive vice president of the libertarian Cato Institute. Boaz notes that Trump accused [former President Barack] Obama of taking “the easy way out” and promised to do away with executive orders—only to then issue 220 executive orders in four years compared to 276 issued by Obama over eight years. Biden, despite frequently talking about the necessity of political consensus, has already issued 85 executive orders, putting him roughly on pace to match or exceed Trump’s one-term output.
Like watching an infant eat pureed spinach, watching senators question Supreme Court nominees is not for the squeamish. But beginning Monday, the confirmation hearings for Ketanji Brown Jackson can be instructive if she is asked:
In the 1978 decision that permitted racial preferences in university admissions, Justice Harry Blackmun said, “In order to get beyond racism, we must first take account of race.” Do you agree? By what criteria should the nation decide that it has arrived “beyond racism”? Or does the “diversity” rationale mean race-based admissions are forever?
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Article I “vested” legislative power in Congress, making Congress the mandatory location of this power. So, presumably there are some congressional grants of discretion to executive agencies that are unconstitutional delegations of legislative power. Is the separation of powers compatible with Congress’s constantly giving administrative state entities vast powers to write rules regulating private conduct? Should courts or Congress decide whether Congress violates the non-delegation doctrine? Is consent — democracy’s foundational concept — attenuated almost to disappearance if it means merely consenting to Congress consenting to administrative agencies regulating our lives?
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In 2004, the U.S. Court of Appeals for the 10th Circuit upheld an Oklahoma law forcing online casket retailers to have (expensive, time-consuming) funeral licenses. The court acknowledged that the law punished one faction (online retailers) to enrich another (funeral directors) but breezily said “dishing out special economic benefits” is “the national pastime” of state and local governments. Should there be some judicial supervision of such practices? Should courts take cognizance of obvious rent-seeking (wielding the law for private economic gain by abridging the liberty of competitors) motives? Randy Barnett and Evan Bernick, authors of “The Original Meaning of the 14th Amendment,” say the guarantee of “due process of law” (emphasis added) proscribes “legislative action that deprives people of life, liberty, or property without a permissible legislative purpose.” Is gratifying rent-seekers such a purpose? So, do Oklahoma’s law and a zillion other rent-seekers’ delights violate the 14th Amendment?
James Madison said the powers delegated by the Constitution to the federal government “are few and defined.” If, however, Congress “finds” that broccoli enhances public health, and that health has a “substantial effect” on interstate commerce, may Congress constitutionally mandate buying broccoli? If not, why not?
Here’s part 16 of George Selgin’s brilliant series on the New Deal.
