Wait, Bush understands supply and demand?

This seems to be the case recently when he visited Saudi Arabia. Breitbart.com is reporting that:

US President George W. Bush said on Saturday that a hike in oil output by Saudi Arabia would not solve American energy problems…

Our problem in America gets solved when we aggressively go for domestic exploration. Our problem in America gets solved if we expand our refining capacity, promote nuclear energy and continue our strategy for the advancing of alternative energies as well as conservation,” he said.”

This is definately a good start and follows my post about how Walter Williams when address the energy situation talks a lot about how domestic production has been blocked. The Saudis are doing what any oil production company would do. When the price rises they expand production. The price rise of late has been mostly to do with the demand. Many developing economies are industrizing and growing fast i.e. India and China.

President Bush hasn’t been the best when it comes to viewing the world economically, he is dead on here. He shouldn’t worry too much because, along with an expansion production, higher prices also lead to an expansion in innovation. Now that the price of gas is so expensive and important, we should see innovations increase, assuming that we do not discourage innovation with certain institutions. That is for another post.

For all of you voters out there who come to me and say “We need to elect someone who can bring gas prices down,” this is bad in so many ways. You should not depend upon the state for anything and the President of all people cannot bring gas prices down by himself. If you want to see your gas prices go down, invest in companies who innovate. Buy their stocks and bonds and encourage people to innovate efficiencly. Subsidies from the government often do more harm than help because in that system who decides what is the best thing to invest in?

You will invest in the area that will bring you the most profit and not in places your highest donors are from. The team or company that will bring you the most profit will be the best at what they are doing. As this is true with Google being one of the best at search engines, Microsoft one of the best at operating systems, and Apple one of the best at MP3 players.



Published in: on May 17, 2008 at 10:09 pm  Leave a Comment  
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