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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Wednesday, November 21, 2007

Price of Gas?

Its very interesting to me. Although the press has tried to make the price of gasoline a big issue in the US, it really hasn't taken hold as a major issue with the American public as much as I would have expected. Most people in the US go to the gas pump at least once a week and the prices paid are noticed when it costs so much to fill one's tank.

Where is the outrage?

Chuck Schumer tried to play this card a while back with calls to start releasing fuel from the national strategic petroleum reserve with thinking that this veritible drop in the bucket in world demand would do anything. Chuck Schumer's idea is all form over substance. Americans yawned. Bill O'Reilly wrongly accused oil companies of being behind the price rises ignoring market forces that cause the price to rise. Americans yawned and both dropped their blathering on the issue.

The reality is, that fuel prices are priced globally. There is a world outside of the US and demand from other countries such as India and China -where the price of fuel is subsidized and controlled therefore creating artifically high demand- has been rising dramatically and classic economics tells us that when demand rises without being met with counteracting supply, prices will naturally rise.

There is little that any national politician can do to impact the price of fuel other than long-term things that creates investment in the sector such as limiting regulations that have hamstrung investment for decades int he US.

The other reason that people are not as excited is this illustration....



As the above illustrates, fuel has become a much lower component of everyday life and therefore is not the issue that it was 20 years ago.

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