Sunday, May 03, 2009

Prices and the supply of gasoline

Prices convey information. The higher something costs the more scarce it is likely to be, since plentiful items rarely cost very much (hence the expression, "dirt cheap"). With this in mind take a look at the following chart from Mark Perry:

Gas is cheaper than anytime except from about 1986-2003, which tells us that we don't appear to be in any imminent danger of running out of it. Nonethless the Obama Administration wants to engage in a multibillion dollar effort to retool the U.S. economy to promote "green" jobs and sources of energy. In other words, they want to spend money in order to promote the usage of more expensive forms of energy to replace another form of energy that appears to be plentiful.

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