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September 19, 2005
Things happening all over the place!
A few quick thoughts on stuff happening near, and stuff happening far.
First, let's do far: So, there was an election in Germany yesterday, and it pretty much completely contradicted everything that everyone said would happen about two months ago. Back then, Angela Merkel and the Christian Democrats had what should've been an insurmountable lead in the polls (they led by 20% over the SPD). Instead, the CDU and the SPD ended up in an almost perfect stalemate.
Let's be clear: that sucks. It sucks mostly because the most likely result of the deadlock will be that the CDU and the SPD will form a "grand coalition" government which will be completely unable to move on sorely needed reforms. I was definitely hoping for a strong CDU win, but I would've settled for anything decisive considering how Germany is at 11.4% unemployment and around 1% growth rate. So, absent any reforms, they'll continue to tank, and drag the rest of the eurozone down with them (but that'll be okay since the EU is imposing new textile quotas on China, right? Right?). So yeah, bummer.
Now let's do near: I've got to say that, so far, pretty much all of the decisions related to oil or gas that have been made in the wake of Katrina have been spectacularly bad. Most recently, refineries have said that they plan to put off regular maintainence in order to keep output at its peak. Here's whay that's dumb: Even without catastrophic storms in the Gulf, US refining capacity is hopelessly tight due to our not having built any refineries in decades. Now take an extra 10% out of the total, as a result of Katrina. The idea now is to put all of our other refineries at risk (to say nothing of the lives of the workers who operate them) by foregoing routine maintainence. I mean, wow. That idea is so bad it's practically epic.
The other dumb thing people want to do is to temporarily repeal state gas taxes. Yes, gas is really expensive. You know why? Because there isn't enough of it. We can argue all day about what markets can and can't do, but the one thing markets do better than pretty much anything else is keeping people from using too much of scarce resources. Gas is usually pretty scarce to begin with, and it's even moreso now, with the havoc in the supply chain. There is less of it around, and so it should be harder to get (i.e. more expensive). When you muck with that, say by lowering taxes, you're interfering with the best mechanism we've got for keeping people from using too much of something we don't have enough of. Who needs carpools when you have short-sighted politicians?
Also, one lesson that we should take away from all of this is that having a strategic petroleum reserve doesn't do anyone a damn bit of good. A strategic gasoline reserve would be infinitely more useful. I'm just saying.
Posted by matt at September 19, 2005 09:14 AM
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