I can't drive....55!

The political environment in America regarding energy is beginning to feel like it did when the disastrous Jimmy Carter was president...and that spells trouble!

May 24, 2006 -- New York Post -- WASHINGTON - In a surprise move yesterday, Sen. Hillary Rodham Clinton called for "most of the country" to return to a speed limit of 55 mph in an effort to slash fuel consumption.
"The 55-mile speed limit really does lower gas usage. And wherever it can be required, and the people will accept it, we ought to do it," Clinton said at the National Press Club.

Before sounding off on the benefits of a lower speed limit, Clinton called for a combination of tax incentives, the use of more ethanol-based fuel and a $50 billion fund for new energy research to cut the consumption of foreign oil 50 percent by 2025.
She also pushed for half of all the nation's gas stations to have ethanol pumps by 2015, and for every gas station to have them by 2025.

This is just another example in the attempt by government do-gooders to meddle with supply and demand in order to curry favor with petulant voters who have an expectation of low gas prices regardless of prevailing market dynamics. While 55 mph will certainly reduce gas usage, it's the ancillary government mandates which concern me. Jimmy Carter started off with 55mph and ended up with price controls...look where that got us...ugh!

As the price of gasoline continues to rise, increasing numbers of gasoline consumers will voluntarily use less by changing their driving habits, buying more fuel efficient cars, riding a bike occasionally, or by using an affordable fuel substitute.

The market will self-correct without the political meddling of hand-wringing, pointy-headed liberals who anoint themselves to be our keepers.

Look, China and India are jumping into the petroleum consumption market with both feet, yet the global oil supply has remained constant. Of course the price will go up...it should go up under those conditions. Let's say the politicians in the U.S., and they are thinking of ways to do this as we speak, decide that the oil companies are charging too much for gasoline and decide to fix the price of a gallon of gas at $2.00 rather than the $3.00 to where the market has naturally risen. What will happen...I mean after the politicians tell us what great friends they are to the consumer and how we should reward their vigilance with votes? Motorists will drive like maniacs and in days there will be huge shortages of gasoline...just like in the 80's when the hapless, idiot of a president Jimmy Carter tried price controls. There won't be any gas available for anybody...then where will the economy be?

At $2.00 per gallon there is no incentive to conserve gas, but there is incentive and expectation to reward the politicians who gave you low gas prices. And there you have it in a nutshell...politicians are in the business of getting re-elected and lowering gas prices is a good way of doing it. They can always blame the resulting economic crash on the bad policies of the previous administration and cite it as evidence that they need more control to regulate the economy.

Back to Econ. 101...

As the price of gas rises, there begins to be economic incentive for innovators to jump into the fuel market with alternatives. If the price is kept artificially low, there is no incentive to develop new fuels, new engines, or new modes of transportation. Inventors and innovators do not invent and innovate for the benefit of their fellow man....the idea of that makes me want to hurl! They act in their own self-interest based on a profit motive. The fact that mankind benefits somehow is wholly coincidental.

The improvement of mankind is almost always the result of individuals seeking financial gain for themselves, independent of their concern for the wellbeing of their fellow man.

To borrow an analogy from Walter Williams: as you sit down to dinner and enjoy a baked potato with your steak, are you quietly thankful for the potato farmer in Idaho who generously provided you with a potato? Of course not! That would be as idiotic as this week's Senate immigration bill. Moreover, the Idaho potato farmer never gave you or your wellbeing a second thought as he planted and harvested his potatoes. But by the magic of the free market, the Idaho potato farmer, motivated solely by the pursuit of financial profit, improved your life by selling to you a delicious Idaho potato to eat with your steak dinner.

The government doesn't meddle in the potato market, it doesn't limit potato consumption, it doesn't punish potato consumption by levying taxes, it doesn't use scarce tax dollars to fund research into finding potato substitutes. Why doesn't the government do this with potatoes the way it's doing it with gasoline? Because ignorant voters aren't banging their spoons on their highchairs, clamoring for cheaper potatoes...that's why. If they were, believe me, politicians would be investigating potato price gouging by the Big Carbohydrate Cartels.

For the free market to work, buyers and sellers have to have unfettered opportunities to haggle over price. No government market mandates, no idiotic tax incentives...no meddling in the markets period. Markets will naturally take care of themselves, finding the proper levels for supply, demand, and price.

Higher gasoline prices invite competition. Then, some smart guy will innovate the internal combustion engine, create an alternative fuel, or something to compete with gasoline that consumers want, and it will make him fabulously rich. And he won't have done it for the betterment of the human condition...he couldn't care less about the condition of his fellow humans...he will have done it to become filthy, stinking rich...and we all will benefit greatly from his craven pursuit of money. Individuals competing for profit always produce corrections in the market that favor consumers.

Hillary called for most of the country to return to 55mph. What does that mean? Does she mean 55 mph only in red states where evil conservatives drive too fast? Or maybe she means that law makers and VIP's get to race to fund raisers and jet around the country taking care of the nation's business and only the little people have to adhere to 55.

And then there was this interesting hedge about 55 mph, "and where ever it can be required, and the people will accept it". If it's a federal law, is it not required everywhere? If they pass a federal law in Washington, the people don't have a choice to accept or reject it...what does she mean?

Frankly, I think it's a policy trial balloon...she doesn't want to come right out and be in favor of restricting the people's behavior unless she gauges there is significant public support, so she floats the idea of 55 mph, alcohol mandates, and new consumption taxes, to gauge public support while leaving herself a plausible out in case it's not popular. If the idea stinks, she can always point to having stated, "where ever it can be required, and the people will accept it". It's standard Clintonian tactics to gauge political support or opposition for a proposal with a hedge. The hedge gives her plausible deniability about intent if it turns out to not be popular.

Once she has presidential power to wield however, look out! There won't be any hedges then...just mandates, restrictions, and taxes.

Say it with me...President Hillary Rodham Clinton...be afraid, be very afraid!