Iceberg Dead Ahead

The latest in a series of stupid ideas to come out of Washington, DC, is this $100 gas rebate check various lawmakers are touting. They can dress it up and spin it any way they like, but their motives are nothing more or less than simple pandering, explained easily in Hulk-speak: "People angry, election coming!"

But it's much worse than that. Economically, it's exactly what we don't need. Here's the problem. We have this tremendous appetite for gasoline. Our government has shielded us from the true economic cost of providing unlimited quantities of gasoline for years. Mind you, I'm not talking about only the costs to the oil companies, although we subsidize the bejeezus out of those, too. I'm talking about all the costs to the system, including the tremendous cost our government pays to maintain pipelines and distasteful regimes all over the world. China and India have decided to have Industrial Revolutions, and so they're gulping oil products like fratboys at the kegerator. The big oil fields have peaked. We're pumping lots of water into them to force the oil out, but a lot of what's flowing out is the water they pumped in. So supply is declining and demand is increasing...this has been the case for some years, now. If the price had been allowed to rise per the market and the true costs of production, we'd have been paying prices above what we now pay years ago.

So, as a nation and as individuals, what should we be doing about this? We should be driving more fuel-efficient cars. We should be investing in alternative energy. In general, we should be making choices which cause us (both us and the US) to consume less oil. What drives down demand? Higher prices. What are the bipartisan numbskulls in DC proposing? Lower prices, essentially, in the form of a rebate check. Don't worry, the government has your back. We'll pick up the tab. Pay no attention to that pesky reality lurking in your global energy market. Drive a Hummer. Hell, drive two. Here's $100. Please vote for us. We'll send you money.

Tom Friedman had it exactly right on NPR this morning. This rebate check is energy policy as if written by OPEC. It's the dealer cutting the junkie a break to keep him on the hook a little longer.

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