cross posted from The Dream Antilles
This past week we were all treated to a proposed executive repeal of the venerable Law of Supply and Demand by McCain and Clinton. Today, not to be undone, El Presidente made it clear that they were too late, he had already issued an executive order nullifying the Law of Supply and Demand. And by golly, he was going to take credit for that.
According to Bloomberg:
Hillary Clinton and John McCain are both pushing a “gas-tax holiday” to give consumers an 18.4- cent-a-gallon price break. Clinton says the plan will take excess profits from oil companies. McCain says it will help families buy school supplies.
Economists have a different take: They say the oil companies may end up the biggest beneficiaries, while the aid to families wouldn’t be enough to buy a $35 backpack.
The trouble with the plan, they say, is that oil prices are rising because of low supplies, and companies will continue to charge the average $3.60 a gallon and just pocket the money that would have gone to federal taxes.
And this doesn’t even mention that old bugaboo, the Law of Supply and Demand, which holds that decreasing price usually stimulates consumption. This is that Law: If a bottle of beer was $2 and now it’s $1, wouldn’t you consider having 2 instead of one? So the proposal, supposedly decreasing the price, would lead to greater oil consumption and then, uh oh, higher prices.