Deseret News | Falling oil prices show free market is still working

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Falling oil prices show free market is still working

Lew Jeppson | 1:13 a.m. Nov. 16, 2008

Yes it shows the free market still works, but it also shows the effectiveness of mass transit projects in countering OPEC's power. In the late 1970's, under the much maligned Carter, the United States got serious about conservation and synfuels. This called OPEC's bluff and they backed down. But we didn't learn our lesson and we became energy profligate in the 1980's. Yes, the world recession is lowering the demand for oil, but consumers have also contributed by using more mass transit. This is calling OPEC's bluff again. Let's hope we learn our lesson this time.

OPEC? | 6:59 a.m. Nov. 16, 2008

If we really want to call OPEC's bluff we should do everything we can to become oil and energy independent. We have great untapped resources for oil, coal, natural gas, not to mention solar, wind, geothermal, nuclear, and other alternative energy sources. We should focus on being a leader in those areas and we won't have to depend on getting our oil from hostile and unstable countries that hate our guts. Mass transit is great, but it's not the only answer. The high oil prices that environmentalists love to get us going on non-oil energy sources were a part of the cause of our world-wide financial crisis. I'm crying a river of tears for those countries who rubbed their hands in glee over our panic over high oil prices and are now worried. We have a chance now to develop our own resources and alternates and be rid of them entirely. But how much do you want a bet that nothing will happen until the next time they get us by the throats?

irony | 8:23 a.m. Nov. 16, 2008

Did the rise of oil prices and profits that in part led to the collapse of many companies, and impending bankruptcy of the US auto industry also show the free market works? This is all purely monopolistic and doesn't seem to have much to do with free markets at all. The price of a commodity or product has no connection at all with the cost of production, or did the cost of producing a barrel of oil or a gallon of gas just double then half? Now the G20 leaders promise to restore growth, but the myth of eternal exponential growth is the lie of the the entire pyramid scheme system. The booms and busts leading to the ultimate bust will only be avoided if we switch to a mindset of sustainability.

Comments continue below

Michael | 9:05 a.m. Nov. 16, 2008

The "free market" works when there is some balance. The balance has been reestablished by drop in demand. But the fact remains that the world's primary suppliers of cheap oil are still only a few (generally anti-democratic) countries. We can retain some of the balance- and help our national security and reduce the need for further middleeast military actions- by moving towards renewable energy sources. This will also prop up the economy by creating jobs and keeping money within the USA that otherwise would be exported. This is all spelled out quite well in Thomas Friedman's new book, Hot, Flat and Crowded".

Anonymous | 9:41 a.m. Nov. 16, 2008

Maybe, but when the prices go up again, and they will, we'll forget all about the free market again and start spouting conspiracy...

Gas will be higher come June 09 | 9:58 a.m. Nov. 16, 2008

Because the things that drove it up last time are still in place; high demand from a burgeoning middle class in India and China.

The plurality of carbon fuels is consumed by the US, that is true. But the rest of the world uses more than twice as much as we do.

So when the world's economy begins to start moving again in the second quarter, as night follows day, demand will push up oil prices.

So sell the SUV while you can.

Robert | 11:27 a.m. Nov. 16, 2008

Yes, you big dumby; and how long do you think they will stay low. Learn from history.

I'm happy | 12:57 p.m. Nov. 16, 2008

that gasoline is going down, but I now have a good appreciation for the volatility of the oil market and the next car I buy will be the most fuel-efficient car as I can find. I really do hope that we'll learn from this experience and use it as a starting point for new ideas and better systems, but I know the author of this article is right on the money: when "crisis" (temporarily) disappears, we are notorious for swiftly forgetting the issue and living day-to-day in myopic, blissful ignorance until the same old problem comes back to bite us again.

I remember how fuming mad most of us were over the bailout. I'm still waiting to see if we learned from that one when Hatch and Bennett come up for re-election. If they get the boot, my faith in humanity will be restored. I still have the nagging feeling they will end up dying in office at a very old age, though.

Johny Fairplay | 1:05 p.m. Nov. 16, 2008

Very nice editorial.

Wilkey | 1:26 p.m. Nov. 16, 2008

Yep.

One more reason gas will be higher by June: Obama's going to ban drilling in all of those "sensitive areas." I agree 100% that mass transit and better fuel economy are important to holding down the price of oil (and the trade deficit). But we should not forget that the ability to put our own resources on the line is also a powerful incentive to OPEC, et al to keep their prices reasonable.

I actually hope Obama bans further drilling and exploration in the US. Then when gas hits $7/gallon in October 2012 he can try to explain that to the voters. I have a feeling that "yes we can" and "hope and change" and "we are the ones we've been waiting for" won't quite do it by then.

Anonymous | 1:35 p.m. Nov. 16, 2008

Oil is a finite resource so we had better remain focused on other energy sources.
The new small house-size nuclear power plants capable of supplying a small city seem like a good alternative for providing among other things electric energy for electric cars.

A different view point | 1:35 p.m. Nov. 16, 2008

Perhaps it would be better if we had presidential elections every two years in stead of every four years.

It seems to me that each time we have a presidential election the price of oil seems to go down and then the price will raise after the election.

There must be some kind of relationship.

So perhaps we ought to have elections more often.

I'm told demand for oil is down but.......

Could it be possible that the price is forced down using the laws of supply and demand to influence the election in some manner and then allowed to raise after the election.

I wonder what the price of oil will be in April of 09? Any takers that it will be quite a bit more?

Gee I guess we will formally be in recession in April and the so called demand will be down but the price will be up.

I guess it is just a coincidence.

Wilkey | 1:40 p.m. Nov. 16, 2008

*** "Perhaps it would be better if we had presidential elections every two years in stead of every four years." ***

Or every year. It's in the election years that politicians are unwilling to vote for stupid bills that no one else wants. Senators make their unpopular votes in years 1, 2, and 3 of their terms, knowing full well that by year 6 most idiot voters will have forgotten.

How many voters in 2010 will even remember the bank bailout? Or the attempt at amnesty?

the truth | 5:48 p.m. Nov. 16, 2008

The Gas prices were higher during the election season and only dropped as it came to a close.

IS this OPEC messing with US elections?

It would seem so.

The correlation is very strong.

No linkage | 9:10 p.m. Nov. 16, 2008

The idea that you can link gas prices to presidential elections is absurd. Prices were bid up by oil futures speculators on the stock market and like all things that go up, they eventually come back down.

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