Friday, January 12, 2007
Economic Populism On The March in Congress
After looking over this article on the energy bill that is being push through the Democrat controlled Congress, I've become convinced that the Dems are filled with a bunch of economic populists who seem to have failed to learn a lick of economics. Now what has convinced me of this is that these members of Congress are willing to push through a measure in the bill that would force energy producers to pay a "resource conservation" tax $9 on a barrel of oil and a $1.25 per million Btu on natural as long as the market prices remained above $34.47 per barrel and $4.35 per million Btu of natural gas. The Democrats might think the oil companies are greedy and sticking it to the American people thus they feel this measure would punish energy producers and force them to lower their prices but in reality they fail to realize the key word in the whole passage which is "market prices." I would be all good if such a measure would make the energy companies jump and lower such prices but they are held hostage to the market which is a function of supply and demand. As long as the demand is high and supply is low you'll have high prices and lower prices when the opposite occurs. So you can threaten to punish the energy companies for higher prices(something they have no control over) by imposing this onerous tax but in reality these measure will only be passed on to the buyer of the raw petroleum and gas which eventually will be passed on everyday Americans who end up consuming these products. If the folks weren't so busy trying to push through this economic populism on energy companies, they'd realize that the markets are doing their thing and are responding to lowering of demand which in return is resulting in falling oil and natural gas prices. For me, I'll take the free market over an interfering populist Congress each and every time.