Supply, Meet Demand

By May 16, 2007Energy

The market works.

WASHINGTON — U.S. motorists could soon find some relief at the pumps as record gasoline prices may decline once more refineries come back online to make motor fuel and gasoline imports increase, the government’s top energy forecaster told Congress on Tuesday….

“With refinery production expected to improve during the rest of May and import volumes increasing over the last few weeks, gasoline markets may ease somewhat, causing gasoline prices to recede from their current high levels,” EIA head Guy Caruso told a Senate Energy and Natural Resources Committee hearing on summer gasoline prices.

EIA is the U.S. Energy Information Administration. Caruso’s testimony is available here in .pdf format.

The Knowledge Problem blog features a good round-up of economists commenting on gas prices, gouging and the marketplace. Michael Giberson notes a disconnect between economic analysis and political posturing.

It is easy enough to recycle old arguments on price gouging because the economic lessons here are clear, commonsensical, and well settled. The policy debate remains as unsettled as ever, it seems. Maybe economists need to develop some new arguments.

Hah! While you’re at, see if you can maybe rework that 2+2=4 equation. It’s so old.

UPDATE (5:25 p.m.): An astute observation from Iain Murray of the Competitive Enterprise Institute:

[Any] politician who wants urgent action on global warming on the one hand and complains about gas prices rising on the other is clearly suffering from schizophrenia. All popular mitigation strategies are based on the belief that rising gas prices deter gas consumption and thereby reduce greenhouse-gas emissions.