BUSINESS WORLD By HOLMAN W. JENKINS, JR. On Gasoline, Voters Get the Politicians They Deserve May 10, 2006; Page A19
Few are the subjects on which you can exhibit in public an abject, sub-protozoan stupidity without fear of damage to your reputation. Gasoline is surely a miracle commodity. Yet it should be bracing for politicians, the American people and the press that the only sensible opinion they're hearing on $3 gasoline is coming from a reviled, overpaid energy executive, namely Exxon's Rex Tillerson. No, he explained to NBC's Matt Lauer, the company won't voluntarily surrender its profits to make Americans feel better about rising fuel prices. He works for stockholders. "We're in business to make money." Yes, he tells audience after audience, the world will depend on hydrocarbons as a primary energy source for decades to come. "It is true that the age of 'easy oil' is over. What many fail to realize is that it has been over for decades. Our industry constantly operates at the edge of technical possibility, constantly developing and applying new technologies to make those possibilities a reality," he told a group in Washington last week. Doubters might consult a new book by energy economist Mark Jaccard, entitled "Sustainable Fossil Fuels," winner of Canada's Donner Prize. He argues that hydrocarbons, in the form of oil, gas and coal, exist in such abundance, the challenge of technology is how to burn them more cleanly, not how to survive without them. The closest Mr. Tillerson comes to a prediction is that, with all these fossil hydrocarbons in stock, technology will allow the world to consume a growing, rather than shrinking, volume of fuel at a price users are willing to pay. This puts him at odds with the "peak oil" theorists, but rests on the defensible proposition that the future will be much like the past. What the future price will be, Mr. Tillerson doesn't vouchsafe. Exxon is sticking to its corporate discipline of investing in oil projects only if they'll pay an adequate return at an oil price much lower than today's. And since the company handsomely leads its peers on return on capital, its analysis of industry economics must be pretty good. Politicians, in contrast, have made themselves conspicuous by rushing to propose "solutions" to $3 gas that are absurd if not deliberately conceived to cause harm. President Bush would force Americans to save gasoline by mandating higher fuel efficiency for auto makers, never mind that any American who cares to save money on gas already has plenty of high-mileage vehicles to choose from. But if Americans were entitled to choose comfort, convenience and safety over fuel economy when gas was $2, why not when gas is $3? Don't ask, because there's no sensible answer. Floating through all this is an inexplicable, indefensible assumption that gasoline consumption is a sin (or "addiction"), and penance is in order. To the question of how much gasoline Americans should consume, the answer is always intransitively "less." And unmentionable in front of the children is any notion of simply letting the price be the guide to how much gas we use, though the price mechanism has served humanity well enough for several millennia. To raise the most discordant question of all: Why is $3 gasoline a "crisis" anyway? The fluctuations of gasoline are in line with normal experience, which is that commodity prices are volatile. The price chart for gasoline over any number of years doesn't look much different from the price chart for corn, aluminum, orange juice, etc. An even better question right now is: How can the forces that require Mr. Tillerson not to speak idiocy on the subject of gas prices be harnessed to our political culture, where the opposite incentive is sadly evident? Look to a non-phony crisis, that of the welfare state. With their usual dourness, the Social Security and Medicare trustees came out with their annual report last week, and no demographic and fiscal miracles have transpired since last year. These programs would have to consume three-quarters of all projected federal taxes by 2040, up from 40% today, to keep their promises to beneficiaries. One way or another, future Americans will be saving for their own retirement, rather than continuing to pass the bill to the younger person to their left. This is not as big a financial change as it might seem: There was never anybody to pick up the bill but ourselves. What will change is behavioral incentives -- to plan, to adjust individual consumption and savings to take account of the future. Savings foster growth. Taxes (the current way of financing retirement) retard and discourage growth. In 1992, the median retiree over 70 had just $8,659 in financial assets -- less than if he had put away $1.70 a week during his working life. Mr. Tillerson has the stock market looking over his shoulder at every moment, forcing him to adopt the intensive realism that usually prevails when people have their own money on the line. When Americans finally must look daily to the stock market rather than the government as guardian of their retirement, their appetite for fantasies and demagoguery on bread-and-butter issues like gas prices will decline too. The single biggest advance for self-government since the invention of literacy will be liberating voters from the infantilizing illusion that somebody else can provide for their old age. Let's face it, our politicians aren't as stupid as they strive to appear. They talk to us as if we're idiots because we've shown them we want to be talked to like idiots. When we change, they will change. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Message: http://www.houseoffusion.com/lists.cfm/link=i:5:206446 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
