A lengthy examination of gasoline prices and how our able leaders in each party have so politicized the issue that nothing good can happen but plenty of bad things will. Read it and weep for our country. A sample:
Newt Gingrich’s solution is no better. He wants to keep gasoline prices at $2.50 per gallon, by national petition no less. Gingrich is right, I think, to urge for an increase in domestic drilling and the opening of the Keystone XL pipeline. There is indeed every reason to think that the president made the worst of all possible decisions in killing a pipeline that could have cemented America’s relationship with Canada, rationalized production and distribution of oil in the United States, and reduced the risk of pollution by blunting spillage risk from tankers steaming toward China loaded with oil.
That’s all well and good. But recall that there is no evidence whatsoever that suggests that opening the pipeline or increasing domestic oil production, both desirable, will lead to some mythical $2.50 per gallon price at the pump any time soon. Once the right institutional arrangements are made on both of these points, supply should increase, and, on average, prices should decline as consumption increases. But we must never tie government policy to particular price levels. Politicians must set the right institutional arrangements and then let the cost of production and relative demand set prices.
The political ignorance on the Republican side of the aisle is, alas, fully reciprocated by the unwise pronouncements that come from the Democratic side. The president’s own personal statements exude sympathy for those whose lives are made more difficult by higher gas prices. But by themselves, those words don’t translate into constructive policy. Nor does it help that Alan B. Krueger, who chairs the president’s Council of Economic Advisers, takes the occasion to note that the reduction in the payroll tax helps to soften the blow from these prices.