And that is true for the U.S. today. We could meet our domestic fossil fuel energy needs, but we find economic advantage in trading energy anyway. But when we want to use energy as a tool of policy, we have the option.
This happens in personal finance too. I can pay off my mortgage: I have enough capital to do so. So I don’t fear the bank. But with mortgage interest rates so low, I’ve found comparative advantage by keeping my mortgage and investing my capital elsewhere.
Tax payer money -> defense companies -> 'political contributions'
This is why it's probably fine to not win wars because the war is not being fought to be won.
I’m sorry, but what do you mean by “we”? You and I benefit nothing from the current status quo. A small group of people get rich off resources below our collective feet and we all pay more for practically everything.
My mom lives in upstate New York, in a low income area. People there are very negatively impacted by the increase gas prices right now.
If you find fault with it, you have you voice (albeit a very quiet one) via your right to a vote.
If that were really true, the US would not be able to export oil, which it does.
There may still be a tax break for some imported oil. Saudi oil was taxed by Saudi Arabia, and this was tax-deductible for US buyers, even though ARAMCO is owned by the Saudi government and that "tax" is the government taxing itself. Not sure if this still applies.
Some export is geography. Alaska has good access to Japan. There isn't enough pipeline capacity through the Sierras. Stuff like that.
Not sure about the refinery argument. Here's a study made during the last oil glut, so the technology is the same but the economics are different.[1] (Start at page 7.) Refineries can crack heavy crude down to lighter fractions, but they don't have to. Turns out that's not the problem. The problem is getting out too many light fractions - propane, methane, butane - for which markets are limited. Some distillation columns can't handle too much of the light fractions. It's possible to add a reformer stage to combine light hydrocarbons down to at least the gasoline level, but most refineries don't have those. All those problems are solveable on a scale of five years.
[1] https://www.eia.gov/analysis/studies/petroleum/morelto/pdf/l...
This was advantageous for a while, but with fracking, there's an abundance of light sweet crude in the US... that the refineries aren't equipped to process. So, we export that oil.
Changing to light sweet crude is a significant investment to the point where switching over isn't economically viable.
https://www.npr.org/podcasts/381444600/marketplace (the March 7th episode at 4:15 and on)
If heavy sour were suddenly unavailable, they'd use light sweet in a heartbeat.
This is why a lot of fracking stopped in 2020 when gas prices plummeted. It just wasn’t profitable anymore.
- People reduce their consumption of that good.
- People find substitutes.
- People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead.
- On a longer time scale, people start producing more of the good. They pay workers overtime to work more shifts, buy/build more equipment, and so on.
Economist Michael Munger wrote an article titled They Clapped: Can Price-Gouging Laws Prohibit Scarcity? which explains the problems with price controls, even in times of disaster.[1]
1. https://www.econlib.org/library/Columns/y2007/Mungergouging....
I would love if we could use this crisis to get investment in renewables and EVs/batteries.
I could see Congress passing an emergency subsidy before the election if gas stays above $4 especially if it rises above $5. I would hope we can spend an equal amount or more for longer term 'green' investment, regardless of what happens.
IMHO we do need those high prices to discourage driving. It is after all probably closer to the true cost with externalities of global warming. Could spur more investment in renewables too if done right.
BUT would need to help lower earners during transition or will just get pummeled in the election and Republicans will do the opposite of what's needed on climate.
I personally think most equitable solution would probably be raise corporate rate back up a bit + on very high earners/get rid of some wealthy deductions.
Then do something akin to the child tax credit mailed out each month for maybe <50k households. An energy credit. Scale up slightly if have a bunch of kids.
Maybe 20$/gallon would be what it takes for a quick transition?
And yes it's not even that high relatively! I would love to see an analysis taking into account cost of global warming just that we are already feeling.
I read an article earlier today analyzing cost per mile driven in real dollars.
We're actually a good amount lower than 2007 recession. And way lower than 80s.
But people don't see that. They see $5 and $80 to fill up a giant pickup truck.
https://www.marketwatch.com/story/the-price-of-gasoline-isnt...
Ah there we go, you’re trying for “progress” despite the economy limping along right now. Kick them while they’re down ey?
> IMHO we do need those high prices to discourage driving. It is after all probably closer to the true cost with externalities of global warming. Could spur more investment in renewables too if done right.
And you believe the right time to do this is when we have record inflation?
Also gas is hitting $6+ a gallon where I’m at.
Are corner stores really illegal in the US? I could not find anything on the topic from a quick search
The older style with business on ground level and residential above that isn't as profitable for developers and so isn't made as much. Cities, in bowing to demands of developers likewise zone for single family residential and it is thus illegal to build a commercial spot (other than the strip mall along one of the busier roads - that you need to drive to).
it's not like those metals are _only_ found in Russia. The upfront capital expense of opening new mines somewhere else is high, so doesn't make economic sense when Russia has already made this investment in the USSR era, and can pump it out cheap(er) now.
But if the need arises, other sources of such metals can be acquired in the medium to long term. Same can be said for the rare earths from China.
Usually such conclusions are a good time to Google and better educate yourself on the problem domain and solution space.
This wouldn’t have made economic sense to an economist because the goals here weren’t entirely economic. Yet it built a giant economy.
>- People find substitutes.
>- People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead.
This is only true when reduced consumption is possible, when substitutes are available, and when sufficient stockpiles exist to be sold.
If my only driving consists of the 20 miles I drive to work every day, I don't have the option to reduce my consumption if I want to pay my bills and keep from becoming homeless. If there is no mass transit and no opportunity to carpool, there is no substitute. Stockpiles of oil are generally insignificant when compared to overall consumption (which is why releasing oil from the strategic energy reserve is more of a pr move than something which has a substantive or lasting impact on prices).
The fact is that most of the US has been designed for people with cars. Outside of a very few cities mass transit is extremely limited or non-existent.
Dentists have an excellent track record when it comes to predicting tooth decay and treating decayed teeth. Economists have a terrible track record when it comes to predicting economic activity and prescribing sustainable solutions to economic problems that arise.
This language seems unnecessary, given the rest of your comment is very unclear and unexplained.
The last 23 years there's been a war to kill the general computer.
https://www.theregister.com/2001/12/13/the_microsoft_secure_...
>This language seems unnecessary,
It's not, the average gamer and PC buyer has been stealing software from himself for the last 23+ years. Straight, steam/mmo's are just back ended c applications, there's no reason for any piece of software to require a "internet connection" (aka a second computer) half a world away.
The 1990's were great because it was before the computer illiterate got internet. Everyone was expecting level editors and free maps, mods and skins
Level editors
https://icculus.org/gtkradiant/
Free maps mods and skins
... to continue in all the big budget games but that didn't happen because the computer illiterate masses gave up game ownership giving birth to all the evils of modern gaming (shut down games, mtx, always online drm, which is the same as mmo's, aka client-server back ended c apps). So we're losing game history down the shitter and games just disappear from history because stupid got internet.
Pub g and Apex, are just back ended quake 3 and UT2004, minus game ownership.
When the computer illiterate started buying MMO's (which were just rebranded rpg's with stolen networking code), the game industry started stealing PC games on a massive scale, notice how Transformers fall of cybertron a game from 2014, doesn't have basic features like dedicated servers and server lists like every fps from 1996-2004. (aka pre-steam, pre-mmo).
Once game developers realized gamers were stupid in 1997, there was a war on on local applications.
Don't think so? Don't think mmo's killed quake 1-3 and warcraft 1-3?
See here the ultima dev's themselves:
https://youtu.be/lnnsDi7Sxq0?t=1134
Ultima 9 was cancelled for the scam game ultima online, so there was no ultima 10, ultima 11, ultima 12, with dedicated servers and level editors. So we didn't get the awesome future of PC gaming, we got the computer illiterate dumbass future that undid the personal computer revolution taking us back to mainframe computing of the 60's and the average gamer is unaware of it.
Everyone was expecting diablo 2+ to have server browsers and level editing and huge modding, that never happened because they started stealing RPG's and rebranding them mmo's and just started back ending the shit out of every PC game, once they realized the public was stupid as fuck at computers.
Don't think so? We already had infinite multiplayer game sin the 90's with quake 2, until the shit for brains who bought UO and everquest fucked up the future of the personal computer and gaming more generally, taking us back to mainframe computing of the 60's.
"No limit to the # of players - JC, quake 2
https://youtu.be/TfeSMaztDVc?t=95
We could take quake 2 engine an clone all "MMO's and have those same games run locally with ability to host multiplayer from your machine with no logins, subscription fees.
If you have to infinity multiplayer videogames, one allows you to own it and costs $60, and the other has an upfront costs + sub.... guess who got swindled?
> the computer illiterate masses gave up game ownership giving birth to all the evils of modern gaming
It’s really hard to take you seriously with your constant berating of normal people.
>>>This is all you need to know.
And the Jones Act which makes it cost-prohibitive to ship between US ports. https://www.law.cornell.edu/wex/jones_act
We had an oil export ban until 2015. Lifting it is at least part of the reason oil production has increased as much as it has over the past 6 years. If you look at production graphs, oil production was already on a sharp upswing between 2010 and 2015. But it kept going between 2015 and today, even though domestic oil consumption declined over that period.
If you consider grades of oil and geographic locations (i.e. for what and whom various production areas are best suited), it might even be possible that the only reason we could be hypothetically import independent without substantially increased prices based on today's undifferentiated extraction volume is because of the export market. Without the grade and geography arbitrage provided by trade, current production might not be viable without substantially increased prices. (Though, if global prices become extreme and remain so, then at least we could limit the price increases. OTOH, it's probably just easier--and certainly quicker--to make nice with Venezuela rather than restructure our extraction and refining infrastructure.)
Even with massive multibilion investments in fabs all over the place it's going to take years to bring up fab capacity - in the ideal case. And that's just for one component.
Apple doesn't even do manufacturing anyway - they outsource every step of the way. What US alternatives are there to Samsung displays or Foxconn assembly ?
Apple is too high up the chain to bring about this kind of change, best you could probably do is US assembly if you imposed India like tariffs. Not sure how the US consumers would feel about their iPhone jumping in price by 30%.
Even the outsourcing of capacity to PRC, didn't happen in a single year. It happened slowly motivated by margins, not due to some technical breakthroughs that were happening in PRC.
> Apple doesn't even do manufacturing anyway - they outsource every step of the way.
That's again a conscious choice because of margins. Apple used to manufacture stuff themselves in US.
No one is saying Apple has to make display tech as well. Buying stuff from allies like SK, Japan and Taiwan shouldn't be an issue.
> Not sure how the US consumers would feel about their iPhone jumping in price by 30%.
Last I checked Apple had over 40% margins on their iPhone. If Apple shared the same concerns as their parent country, they wouldn't work to maximize their profits, even if it comes from labour working in inhumane conditions.
The systematic destruction of US industrial capacity has been in chase of profits.
Modern Asian manufacturing scales up faster than USA has ever done outside of WWII. Large numbers of infrastructure and people.
Apple sells iPhones in Mexico at 30% over the US price and you still see iPhones everywhere, even considering the purchasing power of the average Mexican is about 1/10 of an American.
In the US apple is regularly above 50%, not to mention that the US market app store revenue per user should be higher as well. There's a reason Apple has segmented their products where they previously only sold flagship devices.
The most recent ones are even more expensive.
Many have gone on record and said even if they wanted to make them here the engineer volume and expertise are nowhere to be found except in China now. The speed with which they can deploy factories for new processes in China is unprecedented. You can’t match that here in the US. It’s not apples mistake, it’s the governments. And the people who vote for them. Which includes you if you’re American (and sitting in a liberal state voting democrat doesn’t count; if you care that much move to a swing state and vote there).
This is circular reasoning. We can't make them here because we don't.
Yes, obviously it would take time to build capacity, but it's silly to argue China is fundamentally capable of something that the US is not. This is purely a question of cost (and, therefore, motivation).
What should probably be countenanced, in my opinion, is "supply chain readiness": make _some_ of the iPhones domestically, so that if it becomes necessary, it is much faster to ramp domestic production. That hurts profits in the short term, but it probably does enhance long term expectation profits (conflict with China is less disastrous).
Unfortunately Wall Street is notorious for its emphasis on the short term -- and that has next to nothing to do with politics.
https://puri.sm/products/librem-5-usa/
It is like 1000$ more expensive than the China version of the same phone. Could Apple and their volume get their price down? Probably but it is still going to be significantly more expensive.
If the US was desperate, we could maybe switch to this phone in an emergency?
Though, most of these parts were first made in the USA so there's no doubt we couldn't do it if we wanted.
While it may not originate from politicians, politics and corporate short-sightedness have been so tightly coupled since at least the Reagan admin that distinguishing the two is arguably missing the forest for the trees.
But yes, the root problem is the people controlling the levers of Capital for short-sighted greed, as is often the case.
Short-sighted pursuit of profit is a failure mode inherent in capitalism in general, no cronyism required.
Take the example of processor, it is ARM, a British design company's spec followed by Apple, a US company to design their chip, which is made by TSMC, a Taiwanese company with equipments from ASML, a dutch company.
Can you elaborate? From my vantage point, the impetus of this was globalization and there are many hands in that pot.
Consumers like cheap goods. Manufacturers like cheap labor. Governments enact policies that effect both.
The result is an outsourcing of manufacturing over the last four decades. It's odd to me that you give a company a pass but seem to blame constituents and governments, exclusively.
Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long.
Now what benefits might you get by manufacturing in the US? Certainly, it could be good for marketing. And consumers, particularly those at the high end, might be willing to pay more for a product manufactured here. Apple has, in fact, tried to do this. Remember when they made a big deal about moving manufacturing of the Mac Pro to Texas in 2019 [1]? Unfortunately, this hasn't worked out as well as they'd hoped due to the expertise and supply chain issues that others have mentioned [2].
[1] https://www.apple.com/newsroom/2019/09/apples-new-mac-pro-to...
[2] https://www.bloomberg.com/news/features/2021-02-09/this-is-h...
>Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long.
This gets to my earlier point. Voting at the ballot and voting with your wallet are both ways to evaluate what people value. Both individual consumers and businesses vote with their wallets. Have you never paid more for something because it better aligns with your value system? Or do you strictly make purchases solely on the input of price? I see many people on HN who refuse to buy Amazon Basic items precisely for this reason, even though they are often the cheapest option.
As I previously said, American consumers largely value cheap shit. Companies largely value profits. Both of these, taken to an extreme, can come at the expense of other things like economic stability or strategic independence. The difference is, I hold all three (individuals, companies, and governments) accountable for those choices. It just seems weird to me that so many people are willing to hold a subset of them to task while giving the other subset a free pass.
>Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long.
Let me reframe this. If I instead said, "Any politician who doesn't take millions of dollars from lobbyists will not be able to stay in office for long", would that make accepting of that money somehow justified in your mind? For most people the answer is no. The difference is we've been hoodwinked into thinking morally ambiguous or outright immoral behavior is somehow ok in one sphere while acknowledging a moral burden elsewhere.
I'm not arguing that we can simply start making things in America on the drop of a dime. Anyone who has been involved in manufacturing knows that there is a lot of manufacturing expertise that has left and can only be done (at the current time, at least) overseas. What I'm poking at is that this is the logical progression of offshoring manufacturing over the last half-century. That strategy is due in part to corporate influence on laws, as well as the government who put those laws in place, as well as the constituents who put those civil servants in place. I'm old enough to remember Ross Perot's quip about the "giant sucking sound" from jobs (and expertise) being sucked out of the country and to witness firsthand the decline of the rust-belt. To act like corporations are blameless in the undermining of local manufacturing is naïve IMO.
it's not weird - it's human nature. Holding the "government" to account absolves themselves of the individual responsibility and sacrifice. it becomes "someone else's problem" to solve - after all, why would I sacrifice my own self benefit?
Tip of the hat for a rare correct use of the word "factoid".
Everything you need to build an iPhone is in one city. This is quite a bit like Detroit of the 50s - where the manufacturer and the entire supply chain for it is geographically compact.
Today, it is hard to find a geographically compact industrial chain within the US.
http://free.sourcemap.com/maps/57d154a89ca3b16d44e95e5e
Compare that to, say, the supply chain for the Ford F150 - https://open.sourcemap.com/maps/582b47c785e240e442569015
> There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is.
https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-...
Of course, he would say nice things about China like this so I take it with a grain of salt myself.
https://www.technologyreview.com/2016/06/09/159456/the-all-a...
This is very relevant because of this new thing that just happened. There was an auction for rights to install an off-shore wind farm. The final price was $4.3 billion. This tells you the value of green energy: it's so valuable that you could convince investors and banks to pony up the money.
https://www.cnbc.com/2022/02/25/us-offshore-wind-auction-in-...
So what are the auction prices for oil extraction?
https://www.denverpost.com/2021/10/07/john-hickenlooper-oil-...
We typically export refined oil products (think gasoline from WA to BC) that have lots of value add (refined gasoline rather than just oil). A lot of it goes to our allies (Japan), or even China. Cleaner American crude might go to other countries who mix it in with dirtier local crude to create something that is refineable. The trade has a net benefit if you don't treat oil as some homogenous resource. This isn't even to mention geography conveniences: we export to Canada, Canada exports to us because the USA is a big country (and lots of Canadian shale goes to Texas to be refined).
IF we had an oil export tariff, the industry would get messed up quickly. It would survive, we would just have to shoulder higher costs for less efficient usage of resources.
[1] - https://upload.wikimedia.org/wikipedia/commons/6/6d/US_oil_p...
An isolationist America that resorts to price-controls or money-printing in order to keep its oil producers afloat risks run-away inflation. Not only due to the issue of EROEI, but also due to threats to its primacy in the global order.
Of course many of think its unfair that the world pays for the US warmongering and general debauchery, but I imagine there are enough people in the State-dept. and the Fed to understand this even if they pretend this whole thing is a "conspiracy theory" to be punished with blasphemy.
Person who has taken an undergraduate econ course only: "Price controls are terrible!"
Mathematical economists: "Price controls are bad by definition, under highly restrictive assumptions about human welfare."
Economists who study the actual history of price controls: "It varies and depends."
Regarding the last view, Isabella Weber has done some interesting work: https://twitter.com/IsabellaMWeber
And of course there are duals to price controls such as production subsidies that can smooth things out. And policies that can otherwise influence things. Money is fungible, after all! And thanks to taxation as a general concept, the universe of people paying for all of this is not necessarily the universe of people buying it, so it's not necessarily "the consumers pay in one way or the other".
For obvious reasons (and very good ones), this is something people won't accept unless the shock is really serious, like a war. Anyway, there isn't sufficient productive capacity either, so the shock importance is a moot point.
a.k.a. slavery
> For obvious reasons (and very good ones), this is something people won't accept unless the shock is really serious, like a war.
No kidding.
But again, it depends on what the goal of the price control is. In a war the goal is not to make life easier for the consumer -- the goal in that case is to get the consumer to stop consuming what the war machine needs for itself.
On the case of war, conscription. It's disturbingly similar, but it's different. In peace times it's usually on the lines of "keep producing or your business will be closed", what is not that similar as the working people are not the ones facing the ultimatum (if it's ever done to a small company, then yes, it's like slavery).
> In a war the goal is not to make life easier for the consumer -- the goal in that case is to get the consumer to stop consuming what the war machine needs for itself.
Economies are large complicated beasts that move all kinds of products. When governments intervene, they do it in more than one way and with more than one goal.
Price fixing also goes with rationing so that the population stays fed.
> On the case of war, conscription.
That works for getting labor for the military. It doesn't work for getting producers of things to produce more for less -- unless you put a gun to their heads, they won't do it, not even during war time.
Hum... Does that assumption ever hold?
Willingness to pay is a proxy for your early earnings and ROI. It correlates very weekly to anything else.
Never
Eg. in a desert with a supply of 9 water bottles and 10 potential buyers. All buyers have the same need (buy a bottle of water or die of thirst). In an efficient market, the price of a water bottle would go to the amount of savings of the poorest person + 1 cent. The poorest person will die of thirst.
and the greatest ability to pay. "Need" has a moral component, which the market does not price in.
But still i would argue that price control do more harm than good.
Price floors can work very well at reducing consumption.
If you put a price ceiling of $1 on paintings, owners will hold and not sell.
If you want to kill the market for paintings, this would be very effective at doing so.
You can imagine similar impacts of price floors or ceilings for real goods like land and housing.
How about every standard economics class you can find at a reasonable school? This is covered in high school and university economics courses. Oh, it's not usually stated as "price controls don't work", but it's covered.
It's quite simple: forcing the price of some good while allowing supply and demand to adjust accordingly necessarily causes them to adjust accordingly. Set prices too low and supply shrivels, leading to shortages. Set prices too high and demand falls off and searches for substitutes.
The ostensible goal of price controls is always just that: to set the price of some good so as to alleviate the burden on some class of people (either the producers or the consumers, depending on whether the price is set too high or too low).
The actual goal of price controls, if it's anything other than propaganda value ("look! we care about you! we're doing something you want!"), does get met. So in that sense price controls may work, of course, if the target of the propaganda is too dumb to understand they've been had or if they have no way to reject proposed price controls. But that's not the sense people want -- every consumer wants lower prices, and every producer wants bigger profits (which often, but not always, means higher prices).
All that said, you can make price controls work. Like, if you enslave some people (generally that would be producers, when you want to set an artificially low price on some good or service). Or maybe if automation reaches such levels that marginal costs are zero for most goods in most goods baskets -- I'm not sure if this has been studied.
That said, your big rant isn't a citation, and saying "LOL IT'S IN YOUR HIGH SCHOOL CLASS YOU GOOFBALL" doesn't really count. I'm looking for one prominent economist that has stated the price controls can never work.
You've been replying to questions about specific situations with generalities! That's not compelling.
Hell, oil was at $100+ a barrel for years within the past decade, without the same level of gasoline prices seen today in the US: that suggests there's more to the current situation then just econ-101 "high input prices mean output price has to be high too".
I’m not an economist, and I tend to see economics “laws” more akin to social science than physics. Ie, economists describe plausible mechanisms and principles, but they are not very useful to make predictions.
Manufacturers can set recommended retail prices but their are limitations to how these can be enforced.
depending on how it is set - most manufacturers set a recommended price, rather than contractually obligate the retailer to sell at a particular price. It's an attempt at price-fixing (without it being price-fixing), but other manufacturers of the same goods could choose to lower their price for competition. It's not the same as price-control.
There is always a sense in which price controls work. It's just never the actual publicly ostensible sense.
Prices are too high! -consumers
Ok, we'll set a price ceiling -government
Yayayayay! -consumers
Hey wait a minute! Supply has vanished! -consumers
<crickets> -government> Price controls have never worked, and never will work, because they cannot work.
You after this comment:
> There is always a sense in which price controls work.
That's all I was trying to get at. We agree they work. If you know what effects they're going to have, and they match your intentions, then they work. If you know the general populace will have a shortage of N95 masks but hospital workers will be getting every mask produced in the country at a reasonable price, then it works. If your state has a cold snap and your citizens don't see $100k bills for a few hours of power (even though many folks will experience blackouts), then it works.
FWIW black and white statements like "price controls never work" ring of a certain "rah-rah unfettered capitalism is always the answer" mentality that lacks nuance. Just because you've taken some macroeconomic classes doesn't mean that how things work is all that simple.
> stated purpose is generally to reduce prices seen by consumers, or to subsidize producers of some particular good/service
I thought I gave examples that fell outside of this?
* Wartime/Emergency: stated purpose is to shift supply toward military/medical uses. Shortages and black markets are acceptable negative side effects.
* Energy: protect citizens from gouging in time of crisis. Lack of price controls did not prevent blackouts to Texans in the US last year. It did cause many folks to be saddled with insane bills.
You can also implement rationing to further mitigate imbalances. So price may be low, but you can only buy 1 per day, or something like that.
Generally it goes the other way around. First government imposes price controls, which cause scarcity. Then they impose rationing.
> Lack of price controls did not prevent blackouts to Texans in the US last year. It did cause many folks to be saddled with insane bills.
Price controls are not the only way you get to end up with limited supply, that's true, and that situation was temporary, also true, and there was no rationing (some areas did not lose power because they were "privileged") while all others did lose power. The people who were "saddled with insane bills" were those who had a specialty spot-price utility.
> Wartime/Emergency: stated purpose is to shift supply toward military/medical uses. Shortages and black markets are acceptable negative side effects.
I acknowledge the wartime thing, but that is quite exceptional. We've had lots of price controls during peace time here and all over the world, and they have never worked for their ostensible reasons. When was the last time we had wartime price controls in the U.S.? Not since WWII.
So if price controls + rationing were implemented at the same time, you think it could work to avoid scarcity? If not then why even bring up the order in which things are implemented?
When you say "price controls don't work" you lack imagination for the space of possible policy problems and solutions. Sometimes price controls will be a useful part of a policy solution and likely more often than some randos on the internet can think of off the top of their heads. In general I would not bet on the idea that "mechanism X is shit because it's not the free market." Our societies have implemented many engineered economic mechanisms, some of which are easy scapegoats because they fail, but many of which are overlooked because they work quietly in the background.
You're conflating two distinct sets of people:
- Most consumers pay a fixed price for electricity set by their utility. Many of these people experience blackouts when there was insufficient supply at that price.
- Some consumers opted into paying a variable price for electricity. As supply decreased, the price they paid massively increased. But in exchange for the high bills, these customers did not experience blackouts, or at least experienced them later than others.
Some in the second group, in retrospect, would have preferred the blackout to the increased price, or perhaps didn't understand the implications of their decision when they originally signed up for a variable and uncapped price. But overall, this situation perfectly illustrates the tradeoffs of controlled vs. uncontrolled prices in the face of supply shortage.
> But in exchange for the high bills, these customers did not experience blackouts, or at least experienced them later than others.
Yeah, so regardless of timing or how much blackout they experienced relative to everyone else, they did experience blackouts. And still paid a lot of money too. Lack of price controls didn't help them in the short term, and in the long term hurt them a lot.
free market doesn't guarantee anything. You're assuming that the free market without price control is supposed to guarantee the access to electricity, even at exorbitant prices.
Those who paid a high bill who did eventually got cut off - they got a bad deal because they weren't savy enough to do risk management, and didn't have enough information on such rare events.
The Texas blackout had a supply ceiling, but no price ceiling (and low elasticity in choice from the consumers, because people didn't want to freeze). It's a far cry from a free market during that week.
Constitution of the United States Article I, Section 9, Clause 5:
"No Tax or Duty shall be laid on Articles exported from any State."
For example, the different types of oil and the way US refineries are setup. That's useful context to know more about the situation.
The tweet-sized post is useful as a counter to the oil company talking points. They like banning Russian imports (eliminating a competitor), but want to link it to expanded drilling and the reinstatement of Keystone XL. Both of these also take time. Yet they say that they can immediately increase production, so I'm not sure the rush for their other requests.
For example, when the USA allowed fracking production to hockey stick (started under Bush #2 and took off under Obama), the international price dropped significantly. That hurt countries such as Venezuela and Russia.
Oil is like a drug. Once you're hooked you're no longer free.
The reality of this article points out the contradictions inherent in capitalist economies.
If there was a tariff how would that impact the rest of the economy. If anything it would only solidify the position of the already big enterprises who are the only ones able to withstand such a hike.
This is all you need to know.
If we had an oil export tariff, then we would very quickly become oil independent. Buyers in other countries are in competition with Americans for this oil, so if you really want to keep the price low in America, we should have such a tariff. Why should we give away our natural resources like this?
Additionally: in these emergency times, a reasonable argument could be made for price controls.