Comments: Cheap Gas

Or even if we GRADUALLY went to $1 a gallon gas, or even $1.60 a gallon - the true market clearing price with today's dollar [closing paragraphs] - Lutz would still feel the same way.

Gasoline, diesel fuel and propane (not to mention plastics and the dozens of other beneficial uses of petroleum) are as important to the economy of the industrialized world as, say, stability in currency markets. But when the dollar and the pound and the euro are threatened governments spring to action to "fix" them, while government's artificial shortages and price spikes in crude oil markets continue to be propped up by asinine comments like this one from Lutz.

What a putz.

Posted by johngalt at October 14, 2008 3:12 PM

JG's comments are spot on. Lutz doesn't care about the impact that high oil prices have on Americans as long as his company is protected from lousy product mix decisions and an unsustainable cost structure due to prior labor negotiation capitulation. "Let them eat cake."

Posted by Boulder Refugee at October 14, 2008 5:04 PM

Yeah and yeah. But Lutz's job is to protect his shareholders from his company's lousy product mix decisions and an unsustainable cost structure.

I'll defend him on Friedmanite grounds, and I also still give him points for calling Global Warming a total crock of s**t such rare courage is good feelings in the bank.

Posted by jk at October 14, 2008 5:19 PM

Blog Friend T Greer's comment was too rich in linkedy goodness for the ThreeSources spam filter, so I will add it:
---------------------------------------------------------
Is this really the first time you have heard this?

I am going to take a wager that you don't have a facebook profile.

See, for those of America's youngest generation it is quite fashionable to say that high gas prices are "the solution." It is also quite fashionable to then raise awareness of this fact by making a facebook group to trumpet your revelation.

Like this one:

High gas prices are a GOOD thing.

Here is their credo:
Lately everyone seems to be an activist on gasoline prices. Many are participating in silly "boycott days" or "boycott company" strategies that are doomed to fail for a very simple reason.

They don't reduce the use of Gasoline.

Any plan that does not reduce the total use of Gasoline is a fraud. If you really want to let companies know you don't want to pay high prices for transportation, stop buying their gasoline. Not "stop for today", because you'll just buy more tomorrow. Not "stop from Exxon/Mobil" cause you'll just buy it from some Retailer or BP or whatever. (If everyone boycotted Exxon/Mobil to "make a point" and only bought gas from BP, BP would need more gasoline which it would then buy from Exxon/Mobile. No change.

If you really want to do something about energy use, you have to use less through conservation or efficiency and use of other energy sources.

Therefore, high gas prices are a GOOD thing, because the higher they get, the sooner people will invest in alternative forms of transportation. This is why I get so excited for these prices. It's gonna hit $4.00 this summer. I hope it hits $6.00 next summer. The higher it gets, the more people will switch to a renewable energy source. Even those who have no care for the environment, those who think that nothing is wrong with rampant pollution and extensive plundering of the earth -- even these people will switch when they see the price difference.

Buy less gas (either through efficiency, or conservation) and buy more renewable energy. Of course, no one will start a campaign on that, cause you know, it would require us as individuals to do some real work .
And here is an another one:

Higher Gas Prices are the solution

People for the most part seek immediate financial relief, and not longterm insurance. Realizing this, car companies have left consumers with the option only to purchase cheap, gas-guzzling vehicles. This works great for them as long as fuel is cheap and electric vehicles cost 10 times as much as gas-powered cars.

However, as gas prices climb higher and higher, consumers find the prospect of paying for fuel less and less appealing, so they are more inclined to purchase fuel-efficient vehicles. So to create an edge among competing companies, more and more fuel efficient vehicles will be created. Eventually, through time, electric vehicles will most likely become a very feasible product, thus eliminating any need for expensive fuel.

If anyone out there is looking for cheap energy, quite frankly the only way to get it is to refuse to buy the expensive energy. It seems pretty simple, but some people seem to just be complaining their heads off while still driving inefficient vehicles. I like to call these people hypocrites.

~T. Greer, confident in the future of democracy.

Posted by jk at October 14, 2008 6:13 PM

Let me defend myself, tg. It is not the first time I have heard of the preference for higher fuel prices. In fact, I have declared a virtual Jihad on Professor N. Gregory Mankiw for his ill-advised "Pigou Club."

It is new (and these are not the first, you've caught me) in the context of a decline in Oil prices, post Panic. The decline is significant on many levels: Is it the pop of the commodities bubble? A recognition of an impending severe global contraction? A return to fundamentals that will help consumers?

Yes, I ignored many who have called for this consistently, and I ignored a few outliers who called it as it happened. I cited the first two serious people I encountered in the context of the current drop.

Posted by jk at October 14, 2008 6:25 PM

The screed highlighted by tg is not news to The Refugee, either. However, it is usually followed by the line, "...and that's why we need higher gas taxes." The Refugee has no quarrel with the market driving up the price of gas and making alternative fuels economical. His problem is with governments stiffling production (supply) and increasing taxes to dampen demand.

Back to the original point, however: Lutz says,"We may hate high fuel prices, but they've been driving us in the right direction when it comes to fuel economy," as though he is powerless to make design decisions. If he wants to design a bunch of rubberband driven cars he can do it. The Refugee bridles at his attempt to used gas prices as an excuse for inaccurate market forecasting (to wit, Toyota got it right) and poor product design decisions. Those decisions were driven more by a union-based cost structure than "what Americans want." He was lucky it lasted as long as it did.

Posted by Boulder Refugee at October 14, 2008 10:13 PM

And another thing: The Refugee is willing to bet that Kudlow's money manager has a lot of money riding on alternative fuel investments that would be jeopardized by lower gas prices.

Posted by Boulder Refugee at October 14, 2008 10:16 PM

br (refreshingly) writes, "The Refugee has no quarrel with the market driving up the price of gas and making alternative fuels economical."

tr (curiously) writes, "T. Greer, confident in the future of democracy."

But what br's quote describes is democracy in action in the marketplace, while tg brings us the voices of America's enlightened youth claiming that high gas prices are "the solution."

As br and I have both asserted, high gas prices are an artificial result of authoritarian regulations and market interference on the part of government. (That the government was purportedly seated through democratic means does not innoculate it from the charge of authoritarianism.)

So what tg means is that he is, "confident in the future of democracy to force "the solution" upon ignorant rednecks who don't understand the urgency of wiping out the worlds most economical fuel source."

Democracy uber alles, except in the case of free markets. (Or any other instances when the majority wants the "wrong" thing.)

And while there's been nothing but the sound of crickets chirping on dagny's open letter to Obama supporters the ideas espoused in these comments from tg explain as well as I've seen how anyone could support Obama: For all their self-espoused enlightenment, Obama-tons just can't see how their beliefs are manipulated by the flowery rhetoric of statism.

Posted by johngalt at October 15, 2008 3:27 PM

@Jg: Almost correct. You forgot the phrase that ends the sentence:

I am confident in the future of democracy to force "the solution" upon ignorant rednecks who don't understand the urgency of wiping out the world’s most economical fuel source for that we may save humankind and Planet Earth.

The most curious thing about this is that many of the members of these high-gas-groups are Republicans. Furthermore, it has been my experience that most young Republicans use similar rhetoric and reasoning to defend current Republican planks.

~T. Greer, not quite sure that it is wise (or possible) to use statist means to accomplish libertarian goals.


Posted by T. Greer at October 15, 2008 5:20 PM

No, I didn't forget the phrase "so that we may save humankind and planet Earth." (I did forget the apostrophe in "world's" however.)

No, the phrase at issue is implicit in the title "ignorant rednecks" along with many other phrases like, "spreading the wealth around is good for everybody" and "the cause of radical Islamic terror is American exceptionalism." You see, we ignorant rednecks don't "know" that continued use of gasoline will wipe out the planet and all of humanity along with it. We still adhere to quaint notions such as proof, evidence, causality, logic, reason.

We don't turn into drooling zombies at every mention of the latest crackpot hypothesis out of post-modern ivory towers merely because someone, somewhere, has the temerity to call it "science."

In order to "know" that gasoline is the harbinger of the end-of-days one must have "faith" in the preachings of his particular clergy who bring this important message from his particular deity.

As for this "ignorant redneck" ... I'm not a theist, therefore I don't "know" how evil gasoline is.

---

I do agree with you that it is impossible to use statist means to accomplish libertarian goals. So what sort of goals do you suppose statists really have?

Posted by johngalt at October 16, 2008 3:16 PM

Aye, point taken. Although I would note that things like "We need to stop giving those oil barons money they don't deserve" is often just as much a reason cited as any environmental concern there may be with the practice of consuming gasoline.

Before I answer your question, I think a distinction must be made.

There are statists who wish we would use statist methods to reach statist goals.

Then there are the folks who would balk at being called a statist, but who have been trained to think that the government can solve all of our problems, and as such, can't help but support statist methods to reach statist goals.

One who thinks that America should nationalize various industries so that the government can wield greater influence, provide greater security, or obtain a bigger budget is of the first sort.

One who thinks that it would be a good idea for the government to send a $200,000 check to every American family (see here: http://www.congress.org/congressorg/issues/alert/?alertid=11976981&content_dir=ua_congressorg) in order to ease America's financial woes is of the second sort.

The goal of the second person is to strengthen America's economy. This is not a goal exclusive to statists. Yet the means of accomplishing the goal -redistributing income- are undeniably statist.

I find the second man much more frightening than the first. It is easy to rob a statist of his masks. It is quite a bit harder to break that Faustian bond of big government and great expectations.

~T. Greer

Posted by T. Greer at October 16, 2008 5:23 PM
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