Wednesday, March 26, 2008

Following the Market

Prices serve their purpose! If you want people to conserve gas, let the price go up. (Further, some research suggests to let it push past historical highs if you really want changes in fixed investments like automobiles and furnaces, etc. to make the conservation behavior more permanent.)

Check this out from the New York Times. America's Biggest news publication, USA Today, has stopped following the campaign busses on the campaign trail. Which is what economists have been saying all along – if oil is truly scarce (or costly to the environment) then the price should be allowed to climb to let the market ration it to valuable users. In this case we get a double-benefit: less gas consumed and fewer voices chattering about the election! Yipee!

Bang

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