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Willisms

« Social Security Reform Thursday: Week Fifty-Four -- It Could Almost Work Out, Or It Could Be Far Worse Than Predicted. | WILLisms.com | Trivia Tidbit Of The Day: Part 321 -- Three Cheers For The American Economy. »

Trivia Tidbit Of The Day: Part 320 -- Energy Intensity.

The American Economy Depends Less On Oil Than Before-

This week, consumer confidence jumped to its highest point since May 2002:

fouryearhigh.gif

Isn't it weird that consumer confidence could rise to a post-Katrina high with all the talk of record gas prices?

It's actually not that weird.

The economy is storming ahead, and people know it.

Moreover, the economy isn't as dependent on energy as it once was. Our cars, despite the SUV craze, guzzle less gas than they once did. Our doors and windows insulate better than they once did. Our refrigerators, washing machines, and other appliances use less energy than they did in the roaring seventies. Offices and homes and stadiums and theaters and restaurants and airports are all far more energy efficient than they once were.

Greater energy efficiency means that energy spending as a percentage of overall consumer spending remains well below where it was a quarter of a century ago, despite a slight rise over the past few years:

energyintensity.gif

High energy costs once forced Americans to change energy consumption patterns. We became more efficient as a result. The artificially low energy prices of the late 1990s produced the opposite result (in vehicles, at least).

Some of the proposals out there today (sending 100 dollars to each American, gouging "big oil" with higher taxes and more regulations) are just. plain. stupid.

Supply and demand drive energy prices upward today. Changing supply and demand is the only way to drive energy prices back downward. American politicians can do little, if anything, of meaning to change international demand, as the developing world (China, for example) is-- well-- developing and consuming energy like never before. It's also difficult for American politicians to do anything substantive when some of the world's worst tyrants and organized criminals and fanatics control the supply at the state level, outside of normal market forces (.pdf):

oileconomiesfreedom.gif

Does that mean American politicians should give up and accept the world as it is?

Heck no. It just means they should stop treating the American people like we are idiots. We need solutions, not slogans. We need drilling, not demagoguery. We need creativity, not bribery. Most of all, we need a little bit of information and honesty from our elites in politics and the media, rather than partisan platitudes and dumbed-down mumbling and grumbling.

-------------------------------------

Previous Trivia Tidbit: Tax Freedom Day.

Posted by Will Franklin · 27 April 2006 11:58 PM

Comments

Picking up on the percentage of individual consumption that energy takes up - Phil Miller of the Market Power blog featured a chart showing U.S. energy consumption as a percentage of total U.S. consumption expenditures between 1947 and 2005.

Energy is just not the same consumer pocketbook issue that it used to be - it only draws attention because it's uniquely visible.

Posted by: Ironman at April 28, 2006 09:03 AM

My question to government is:

A: if the price is too high what will taxing the producers do if not raise it?

and B:

Why should I give the government any more tax money when they are so ineffective with the money they get now?

Posted by: Rob B. at April 28, 2006 09:21 AM

Rob

A) Yes, but americans will see it as more gougeing and not realize they just shot themselves in the foot. But why not another investigation, 31 others didn't work maybe #32 will be the one. not.

B)because its the law.

Posted by: christian at April 28, 2006 09:27 AM

Another good post, although the usual suspects will not listen. They're too busy making the problem worse to pay attention to things which could actually help.

Also, what is Saudi Arabia doing in the "Mostly Free" portion of the list? Put them in "Mostly Unfree" or "Repressed" where they belong, and the fraction of oil production in free or mostly free nations is about 1/3.

Posted by: Windsor at April 29, 2006 03:41 PM

True, Windsor. I think there is a distinction, though, between political freedom and economic freedom.

Posted by: Will Franklin at April 29, 2006 03:51 PM

Will, I don't see much difference with the Saudis. Political freedom is severely limited, and I believe economic freedom is much the same. Isn't their oil industry a nationalized conglomerate, similar to Mexico's Pemex? They may allow foreign companies to work concessions and develop fields (I'm not even sure of this), but everything related to the industry is tightly controlled by the royal family.

And thinking of Pemex and other government control and corruption, let's move Mexico down to 'Mostly Unfree' as well. I'm really beginning to wonder about this whole list, in fact.

Posted by: Windsor at April 30, 2006 01:28 PM