"It's going to be a catastrophe!"
So I keep hearing.
The damage from hurricanes Rita and Katrina will send gas prices through the roof and destroy the economy!
"It's inevitable that this is just the beginning, it's not the end, of this gasoline crisis!" Sen. Charles Schumer told me, as Rita approached last Friday. The New York Democrat went on to say that we're "twiddling our thumbs while Rome burns ... we are weakened in every way!"
He is eager to spend your money to cure his panic. Schumer wants a new "Manhattan Project" that would use huge amounts of your money to fund "independent energy sources." I reminded him that the last time government tried that, it wasted billions on the totally failed synfuels project. Schumer said that was a failure because "political leaders" chose synfuels, but this time Congress would have "non-politicians" decide what projects to fund.
Sure they would.
If non-politicians are going to decide what projects to fund, why do we need Chuck Schumer? We already have a system in which non-politicians decide what projects to fund. It's called "the market."
If the price of a barrel of oil stays above $50, lots of entrepreneurs will scramble for ways to supply cheaper energy. They'll come up with alternative energy sources or better ways to get oil out of the ground. At $50 a barrel, it's even profitable to recover oil that's stuck in the tar sands in Alberta, Canada. As Peter Huber points out in his book, "The Bottomless Well," the Athabasca tar sands alone contain enough oil to meet our needs for 100 years.
But Schumer and other politicians don't trust the market.
After Hurricane Katrina, he and Sen. John Corzine, Democrat of New Jersey, invited reporters to a gas station where they said gas prices were rising not because demand exceeded supply, but because oil sellers are doing something fishy.
"Up 50 cents one day, down 25 cents the next, then up another 30!" Schumer told the cameras. "Something's wrong with the market!"
Something's wrong with the market? I'd think "up 50 cents one day and down 25 the next" shows the market working very efficiently. The oil business is hugely competitive. Gas station profit margins are paper-thin. Station managers have to adjust prices constantly to keep from losing business to a station down the block. Any of us can see the posted prices without even having to leave our cars, and people often drive blocks just to save a penny.
In Honor of His 103rd Birthday, Here Are The 20 Best Quotes From The Late, Great Milton Friedman | John Hawkins