Fiddle, Fiddle, Fiddle

How are US politicians like Nero?? They love to fiddle. It's no surprise that they're considering fiddling with something that will undoubtedly bring the wrath of LUC*.

In an article from thehill.com today, the House Republican leadership is taking jabs at the Democrat majority and calling them out on a promise they made in the 2006 mid-term elections. This promise was that the Dems had a plan to bring down the price of gas. (fiddle fiddle fiddle)

Back in 2006 during the run up to the elections Nancy Pelosi said "Democrats have a commonsense plan to help bring down skyrocketing gas prices by cracking down on price gouging, rolling back the billions of dollars in taxpayer subsidies, tax breaks and royalty relief given to big oil and gas companies, and increasing production of alternative fuels.” (fiddle fiddle fiddle)

Generally I enjoy watching politicians from each party take jabs at eachother. Some of these folks can be pretty funny with their one-liners, sound bites and ridiculous overstatements. It usually means they're too busy playing this game to go about figuring out how to insert more government into our lives. But poking the bear this time may be bad for us all.

Reading Speaker Pelosi's comments sends a chill down my spine. I'm no economist, but I'll attempt to use common sense to break down the segments of their plan.

- Price Gouging: Ok, gouging is bad. But how will they define gouging? Is it simply the gas station owner that doubles the price of gas in a disaster area? How does this apply when the cost of the barrel of oil is going up and gas prices rise accordingly? They couldn't be just trying to appeal to a base instinct that we're all possibly getting screwed by the evil oil companies, could they? fiddle fiddle fiddle

- Tax Breaks/Subsidies/Royalty Relief for Oil Companies: Once again, I'm no economist, but if you take away these things from the oil companies, won't that increase their cost of doing business and then be reflected in the price at the pump? I believe that all of those incentives, given by our very same government years ago, was to help keep the cost of gas unnaturally low. So a long time ago our government fiddled with economic factors and now think that by taking away those they'll be helping? While I wholeheartedly agree that those things should never have been put in place to begin with, to think that taking them away will save me money when I buy gasoline is worse than naive. Do the Dems really think that the oil companies will just dip into profits to make up the difference? fiddle fiddle fiddle

- Alternative Fuels - well, we see whats happening with that grand plan. Now we're running up the price of food. As I wrote in my "Just Chill" post a few days ago, the rush to alternatives fuels has had an effect on the availability and price of food on a global scale. Should we be looking at alternatives to fossil fuels, absolutely, but in the rush to score political points - LUC* wins. fiddle fiddle fiddle

I'd like to make one additional point about those big ol' evil oil companies and their profits. What many don't consider is that gone are the days where these companies were owned by a single person or family who reap the rewards of huge profits. These companies are owned by stockholders and a large chunk of their stock sits in funds managed by pensions, 401(k), and other retirement plans. Basically, these companies are owned by a large number of Americans. It's these people who reap the rewards, whose investment or retirement portfolios grow, and who will be able to retire just a little more comfortably or send their kids to college because they've had big evil oil in their holdings. Damn those evil oil companies for making money in a capitalist society.

It's also these evil corporations that are doing the most research into replacing their cash cow of fossil fuels. If you pay attention to commercials produced by BP, Exxon, et al you'll see they are starting to refer to themselves as energy companies. This is a signal that they see the fossil fuels business as one that will transform into an alternative energy business, whether it's hydrogen, ethanol, or whatever else those really smart folks in the lab can come up with. It's in their best interest to be the ones that come up with the solution.

I recently had a conversation with someone that held the belief that big oil was keeping secret an alternative. Besides being a little too conspiracy bound, it defies some of the basic tenets of capitalism. These companies want to be the first on the block to deliver a better, cheaper product. My belief is, that much like biofuels, it's just not been cost effective yet. When the breakthrough happens where prices/costs are in line with consumer expectations - then you'll see the new energy sources come to the forefront. Are they keeping something secret. Absolutely. But it's not a part of a conspiracy, it's called keeping a trade secret. Should they announce and publish work that is promising so that everyone can do it? No. Not just no. Hell No. They are in business to make money and giving away trade secrets would be bad for their business.

But none of these breakthroughs will come from the folks inside the beltway and no matter how much they practice the violin, it will always just be fiddle fiddle fiddle.

* LUC: Law of Unintended Consequences