Gas prices up, miles driven down : let the market work!
As you may or may not know, gas prices have more than doubled in the last year. Ouch. Politicians and pundits love telling us how this is “problem” is going to get solved. As I’ve recently explained, supply-side economics are not going to change the price of oil. What’s left? Demand.
And, believe it or not, it’s already happening! The U.S. DoT issues a monthly report of highway miles driven. For two consecutive months, Americans are driving fewer miles than we did a year ago. That’s right, the invisible hand of the market is working! Huzzah!
This raises a very important point : We need to let the market work. This means we must not mess with the gas tax! (Unless we raise it, to accelerate the process of moving beyond oil).
Keep this in mind, as one of the two presidential candidates (hint : the old, white one) wants to slash the federal gas tax. Let me repeat it once more : The market is working! Hands off, Washington!
Filed under economics, energy, politics : Comments (2) : Jun 22nd, 2008 by tadfad
June 24th, 2008 at 6:08 am
Nice find Tad!
This is the main reason I am worried about the increasing popularity of hybrid cars. As the price of hybrids goes down, more and more people are going to be able to afford to continue driving, leading to a Jevon’s paradox. (more fuel being consumed via more efficient use of the fuel)
I somewhat wish that gas prices would jump even more dramatically to force a change from oil to renewable energy. No real nationwide progress will be made until there is a true oil crisis (i.e. $10 gas). Things would get worse before they got better, but it would make the transition quicker and we would all be better off in the long run.
June 24th, 2008 at 6:43 pm
I think we still have economics on our side. Hybrids still cost quite a bit more, and only two current models (Toyota Prius and Nissan Altima) can cover the increased price in fuel savings.
Plus, people are all of a sudden aware of things like energy, mass transportation, and bicycles. I’m hoping that we can continue to make a change for the better!