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Reply #4: It's a conundrum [View All]

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TahitiNut Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-19-07 09:48 AM
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4. It's a conundrum
The question seems to be how to reduce consumption of fossil fuels, particularly crude oil. The oil companies are more than willing to trot out the ol' "supply/demand" canard and claim that increasing prices will 'naturally' reduce consumption. This, of course, is a fraudulent connection to "supply/demand" since those are terms used in a overly-simplified microeconomic sense ... where it's further theorized that the price increase resulting for demand exceeding supply will cause increased production - both from existing producers and from new producers entering a (purported) 'free market.' When, however, it's not a question of 'production' (since the actual production of crude oil is an open question with several theories) but a question of discovery and acquisition of natural resources. Since we're closing in on the limits of such resources planet-wide, the mechanism of supply/demand merely enriches current producers/suppliers rather than increases supplies.

Thus, the oil corporations are willing to rationalize windfall profits under the false cover of acting to reduce consumption. That's an illegitimate allocation of wealth. When a society's well-being is at risk as a result of limitations of a strategic resource, the economically equitable approach has usually involved rationing ... assuring that those with more dire need and lesser economic power have equitable access. A rationing system also creates a 'trickle up' effect where a market for rations (entitlements) themselves is created - selling ration coupons. The public (stampeded by wealthy economic interests) is not likely to support rationing. Thus, Dingell's proposal ('stalking horse'?) is a preemptive move ... opting to cut out the oil companies 'piece of the action' and recycling the price/ration to the common wealth rather than private wealth. It's not as equitable as rationing but it's better than ENORMOUS windfall profits for the oil companies (enriching the already wealthy).

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