April 25, 2006

JAMES GLASSMAN:

With gasoline prices close to $3 a gallon, President Bush this morning gave a disingenuous speech to an alternative fuels association about what he was going to do to stem the rising tide. There were a few flashes of candor and insight, but, on the whole, it was a sad example of political capitulation by a former Texas oilman who certainly knows better.

I heard part of Bush’s speech in the car, and the part I heard didn’t impress me much. Ethanol’s okay, though he talked mostly about ethanol from corn and I don’t see much future in that — corn’s expensive to grow, and depletes the soil. Ethanol from waste biomass, which he finally got around to mentioning just as I got out of the car, is better but not as easy.

Of course, there’s lots of loose thinking on energy and gas prices, as Ron Bailey recently noted:

With some headlines blaring about “record oil prices,” a bit of perspective is in order. It is true that in nominal dollars, the price of crude oil has never been higher. However, in inflation-adjusted terms, the picture looks somewhat different. It turns out that the price for a barrel of oil peaked at about $98 in December 1979.

Still oil prices have tripled in the past four years, but the economy nevertheless chugs along. . . . the price of oil would need to double from today’s $70 per barrel to have the same impact on the U.S. and world economy that prices had during the 1970s oil crisis.

As he notes, that could happen, as we haven’t had enough investment in additional capacity, but news reports and political sloganizing about “record high” gas prices are mostly evidence of sensationalism and innumeracy. Apparently, however, the public isn’t so dumb:

Consumers shrugged off higher gasoline prices in April and sent a widely watched barometer of consumer confidence to its highest level in almost four years, a private research group said Tuesday.

Somebody tell Lou Dobbs and Bill O’Reilly.

UPDATE: Lynne Kiesling isn’t happy.

Neither is Pat Cleary.