Wednesday, July 23, 2008

Congress: still economically illiterate:
Legislation meant to crack down on oil speculators passed a key test vote in the Senate on Tuesday.

The test vote on the legislation, which was backed by the Democratic leadership, was 94-0. The support of 60 senators was needed for debate on the bill to proceed. It was unclear when a final vote on the legislation would occur.

With gas prices edging over $4 a gallon, lawmakers are rushing to introduce legislation meant to lower prices at the pump.

Sen. Byron Dorgan of North Dakota, one of the Democrats sponsoring the bill, said the quickest way to lower prices at the pump is to stop speculators from driving up the price of a barrel of oil.

Since this is a family blog, I won't give you my full opinion. Suffice it to say that Congress is continuing to earn its current (abysmal) approval rating in my book. Then we have McCain, who either voted for the above abomination or abstained, switching stories as prices begin to fall again. Don Boudreaux writes a letter to the editor of the Wall Street Journal:

John McCain credits the recent fall in oil prices to President Bush's announced support for more off-shore drilling and, hence, to the fact that the future supply of oil likely will be higher than previously thought. ("McCain Credits Bush For Drop in Oil Price," July 23). Sen. McCain also blames the preceding run-up in oil prices on unjustified speculation.

Sen. McCain can't have it both ways. Oil prices either chiefly reflect the underlying reality of supply and demand or they don't. If baseless speculation caused oil's price to rise to heights unjustified by supply and demand - if speculators are financial sorcerers who detach prices at will from underlying economic realities - how does a presidential announcement signaling higher future supplies cause lower prices? On the other hand, if a more promising prospect of greater off-shore drilling really is responsible for pushing oil prices downward (which I think more likely), why would Sen. McCain ever have blamed high oil prices on evil speculators rather than on the underlying conditions of supply and demand?

I despair of Congress ever getting a clue. Nobody who would make a good Congressman/woman can be convinced to run - they have better things to do.


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