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Friday, November 11, 2005
Bill O'Reilly is right more often than not, but when he's wrong, he's practically clueless. O'Reilly has been at the forefront of accusing oil companies of gouging consumers after Hurricanes Katrina and Rita. Yesterday, on his radio show, he cited, as evidence thereof, the fact that prices have come down so sharply in the past few weeks. I don't have his exact quote, but it was something like "The demand today is exactly the same as it was then." Argggh! Bill is not stupid, but for some reason he's stuck on stupid on this issue. Sure, demand is the same today, or maybe even a bit lower, but the supply is back today. That's why prices are lower. We had a major supply problem, caused by the hurricanes. The hurricanes forced the shutdown of refineries on the gulf coast and interrupted two pipelines that served the Southeast. The oil company execs tried to explain the simple economic facts of life to members of the Senate without blatantly insulting their intelligence, but it wasn't easy. As Lee Raymond, chairman of Exxon Mobil Corp. put it, "By keeping prices higher, adequate supplies were assured." "That's an astounding theory of consumer protection," replied Democratic Sen. Ron Wyden of Oregon. The only thing astounding is that Wyden and other members of Congress don't understand the first thing that a freshman economics student learns in college. Therefore, I propose the following. There should be a federal law that requires all incoming members of Congress to complete a minimum of two semesters of college level economics courses within their first two years in Congress. If they remain in Congress for more than 10 years, they will have to take at least one refresher course. We simply cannot tolerate members of congress attempting to destroy the American capitalist economic system out of ignorance. And Bill O'Reilly should audit the first class. Ralph Bristol
posted by Jack Mercer @ 11/11/2005 06:23:00 AM  
  • At 11/12/2005 07:10:00 AM, Blogger Ronnie Thompson said…

    It is unfortunate that colleges can not teach common sense. Since most congressmen are college grads if teaching common sense was possible, they could understand the basics of economics.

  • At 11/12/2005 06:09:00 PM, Anonymous news blog said…

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  • At 11/13/2005 01:20:00 PM, Blogger chickenhawk said…

    Now I like Bill OReilly, which gets me in trouble with my "Fox news is the devil" friends. I started watching him when I read Al Franken's Lies, and his book "Lies" too (ziiiing! ba-dum pssssh) I wanted to see what this guy was really about. I think he gets unnecessarily picked on most of the time and people are constantly putting things in his mouth that he doesnt say. He gets called a racist xenophobe and he really isnt. He just happens to be passionate and outspoken about a topic that no one wants to touch (illegal immigration), particularly the people who are supposed to: our elected officials. He doesnt get commended enough for all the good things he really does: charity, his outspoken and fearless criticism about a system that does not protect its most vulnerable and innocent: children; a system that allows predators to get off easily (please do pardon the pun there) I disagree with what he says about the war sometimes and I think he is misinformed but that has to do more with Fox news. Oh well though thats another story. But the same went with our oil crisis: I listened intently to his reporting about the oil crisis, and I was with him. He seemed to be one of the few, if any, that attempted to really tackle the issue and get to the nitty-gritty. Your post here does essentially refute what he was saying, but I would applaud him for tackling the issue and having legitimate concern. Thats honestly what I like about him: sexual harrasment case aside, he is always on to subjects that media either does not want to touch, or maybe they just dont feel it is important/relevant. While he may have been a little misinformed/incorrect about the price-gouging etc. I give the man credit for actually really taking the issue on. Now, he is guilty of spin here and there, and once in a while gets a little crazy, but which journalist/outlet doesnt? How come when he does it, editors and journalists react as if he is calling for the re-emergence of Hitler's Final Solution? Jack, elaborate for me here.....

  • At 11/13/2005 08:05:00 PM, Blogger mochi said…

    Are companies that hold a monopoly on natural resources really part of the free market? Do you think we will see the emergence of budget oil companies like Ted Petroleum or Jet Blue Gas? By your logic low income families should go without heat during the winter as natural gas companies raise prices to "protect" consumers.

  • At 11/14/2005 04:18:00 PM, Blogger Jack Mercer said…

    Hi Ronnie!

    Thanks for stopping by the Snipet. I had a short tour in academia (Penn State system) and came to the conclusion that there is little reality injected into the curricula. If you ever want the definitive and simple perspective on economics I highly recommend Thomas Sowell's "Basic Economics".


    I like Bill also. But to err is human, and I think in this case Bill is off and got caught up in the hype of the time. But there is nothing in the world that is not subject to market forces--laws of supply and demand that cannot be broken no matter how much "fixing" happens. That is the reason that government intervention more often negatively affects economics than helps it. I think that if Bill had a brief lesson on the futures market he would maybe understand a bit more.

    Mochi, I disagree with monopolies on a macro basis, but not necessarily on a micro one. Energy is one such industry that benefits from larger company holdings by virtue of its astronomical overhead. Oil companies, for example, make about 10 cents on every gallon they produce. About 40-50 cents goes to the government, and the rest is taken up in the costs associated with procurement, processing, storage and distribution. But like anything in any market, the oil companies or electricity companies cannot sustain prices too high than the marketplace will bear--it is self-correcting. If it gets too high, people will not purchase it in the long-run and you are left with surpluses which create lower prices. I don't buy into the "Big Oil" "Big This", "Big That" conspiracy theories that bounce around the internet, because it doesn't matter how big a company or industry is it is still subject to the laws of economics.

    Keep in mind that I am not saying that gouging does not take place and that opportunity is not taken advantage of at times. I am just saying that there are some things that can't be gotten around and economics is one of them. Gas is back to $1.99 at the local stations here now, contrary to many authorities saying that once it got past $2.50 they were going to keep it there.


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