Maybe He Should Have Worn a Cardigan

Truck and Barter is not very impressed with Bush's call for us all to drive less. 

I'd like to know just why I should conserve. We supposedly live in a
capitalist society based on property-rights and free-trade; why, all of a
sudden, do you ask that I not trust that the price of fuel incorporates all the
scarcities at every level of production? What economic lever broke in the past
month? Why do you think the price system is failing so bad that we need to
"conserve" more than the price signal warrants?

I won't pretend that market prices don't exist, or that markets have suddenly
stopped working; I won't pretend that prices are inefficient allocators of
resources; I won't pretend that I cannot buy as much gasoline as I can afford at
current prices.

Furthermore, Mr. President, I will not pretend that you have legal or moral
authority to tell me how much gasoline I may purchase. I will not pretend that
your feeble call to use less has any impact whatsoever on my psyche. I will not
pretend that the Federal Government knows better than me how much gasoline I
should purchase.

Awesome, well said.  Maybe if Bush had worn a cardigan, like Jimmy Carter did when he asked the same thing, he might have been more successful.  Or then again, maybe Bush should have thought twice about channeling Jimmy Carter on any energy or economics related issue.

By the way, there is much more to the post - make sure to read it all.

Update: This one attracted a number of comments fast.  Here are some additional thoughts

Doesn't it make sense to conserve gas?  Isn't what Bush said correct?

Sure it makes sense, but I didn't need Bush to tell me.  Seeing my average 15 gallon fillup go from $30 to $45 nearly overnight told me everything I needed to know.   I adjusted my driving behavior based on how I value various types of trips.  And so, apparently, did everyone else, as gas consumption in this country dropped almost 10%.  Bush doesn't have to tell you to refinance your home when mortgage rates drop, or to buy less OJ when the orange crop failed -- prices signal these things quite nicely.

By the way, I limited my driving years ago (e.g. I live 1 mile from my office) but not because of gas prices.  Lets say 1 hour of driving gets me 30 miles in the city, and requires 1.5 gallons of gas.  The recent increase in gas prices has increased the cost of that 1 hour of driving by about $1.50.  That is NOTHING compared to how I have increased how I value my free time as I have grown older.  That hour may use up five bucks of gas but hundreds of dollars of my leisure time.  I have often told people that the biggest change you go through getting older is how much your internal valuation of your own free time goes up.  In college, I would wait for 8 hours in a line to get concert tickets at face value.  Today, I buy them market up at eBay, because that 8 hours is now worth far, far more to me than the markup.

Wouldn't voluntary conservation beyond what you have already cut back help reduce gas prices in the US?

Sure, if everyone cut back some percentage more than what they would have already done due to the price increase, then yes that might help push prices down.  Of course every person who did this would lose from doing so.  When the price increases, everyone eliminates their marginal use of gasoline, ie every use or trip that is worth less to them than the cost in fuel.  That means that the trips that remain are worth more to them than the gas (and other)  costs.  Therefore, remaining trips are a net increase to their well-being.  If a remaining trip is then eliminated voluntarily, or the cost of that trip is increased due to the increased hassle of carpooling or using public transit, then their well-being is reduced. 

However, this is the great thing about America:  If you personally value voluntarily reducing your gas consumption to help reduce prices for others, in a free society, no one is going to stop you.

By the way, here is the reason I don't worry about it:  I am old enough to have been driving in the late 1970's.  And I know from experience that allowing prices to shoot up for a period of time, without government price caps or windfall profit confiscation silliness, is going to lead to more supply and lower prices in the future.

Don't you think its unethical not to conserve in times like this?

No.  I don't associate consumption and ethics.  If it is sold legally at a certain price, and I can afford and wish to pay that price, then I don't see that morality or ethics come into play.  While there certainly can be ethical problems spending money unwisely (e.g. blowing money on coke or gambling that was needed to feed your kids), that is a different situation.  I don't feel guilty about consuming gas.

Isn't it a security issue?  Shouldn't we be asked or forced to conserve more to make the US independent of foreign oil?

There is only one time this argument makes any sense - if the world is in a full scale shooting war and all foreign trade and international markets are halted, and then we would have much bigger problems.

Short of the breakdown of world trade and markets, being "independent of foreign oil" is a mirage, an impossible non-goal.  Lets say that the world energy supply and demand was exactly the same as it was today, except that the US produced domestically exactly enough oil to satisfy domestic demand.  But in this case there is still a world market for oil.  The price of oil and gas in this country would not be more or less than it is today, except maybe for a few cents of transportation cost differences.  And if there is an oil supply shock, the pricing in the US will be virtually the same in this hypothetical situation as it would be in today's structure.

Shouldn't the President be doing something?

Sure.  Get the hell out of the way of the people who can fix the problem.  Rethink the regulatory regime that is preventing refinery construction.  Revamp the licensing approach for nuclear power.  Open up oil drilling in proscribed areas.  And find his lost veto pen and ax any dumbshit regulation out of Congress managing energy prices, taxing windfall profits, or attempting to pick winners via subsidies.

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  • While I'm no stranger to critiquing the administration's energy policy, I think the hostility toward his statement is unfounded. Instead of assuming that Bush wants to undermine the free market, it is far more plausible that he anticipates many families will face hardship when heating costs rise by 65% this winter. A little conservation now may make the winter a little less harsh, financially speaking.

  • Marnee

    Okay, but I have to ask one thing:

    " I won't pretend that prices are inefficient allocators of resources;"

    Inefficient compared to what? I mean doesnt anyone have any concept of how quickly prices are adjusted and that they are adjusted minute by dammed minute. Tell me anything else that could allocate scarce resources better! We are not omniscient.

  • Any concept of externalities? Prices don't necessarily reflect everything.

  • Gregg

    Lower demand means lower prices. In light of an unprecedented supply shock, I do not consider what the President said as a "Jimmy Carter" moment. There will be less of everything to go around. It really is that simple.

    I would hope that all of this would lead to longer term development of a more resilient infrastructure.

  • Max Lybbert

    Perhaps I'm too optimistic, but I interpreted the message from the White House to be, "We will not fiddle with price controls. Prices are going up, but you may be able to limit the increase by using less."

    Thing is, as the linked to article says, the increase (with gasoline) simply won't be enough to encourage fuel conservation. When it comes to heating bills, that may be different. But then again, most people already have a good handle on efficient heating (at least in relatively new houses -- one of the big causes of death in "new" houses is the fact that they are airtight and carbon monoxide builds up faster in them).

  • One responsibility we've always vested in the American Federal Executive is foreign policy. With Iran being quoted over the weekend as willing and threatening to use oil as a nation security strategy, I don't think its out of bounds for the President to attempt to use moral persuasion to cause the California effect.

    What is the California effect?

    As badly as CA state government screwed up the electricity market a couple years back the far scarier thing for the energy industry was how easily California cut back 15% of energy usage. I am by no means a crazy environmentalist, but I bet the additive small conservation steps around during a true period of economic or strategic test can cause about the same thing to happen in the raw oil consumption of the entire US consumption. If I'm not mistaken, Iran is about 15% of worldwide oil exports.

    Should we always do that? Heck no. Should we flex it once in a while? Sure seems opportune - especially amidst domestic crys of wolf over the economy.

    Peak oil was sure true... Peak oil PRICE... Why not add insult to injury and conserve a little extra as the price drops further. I'd love the oil producers to feel a little extra pain right about now.