Now that every pundit, media mogul and editorial page pin-head is at full cry about the so-called gasoline price outrage and how it is about to send the economy into a 1929-style crash, I guess it's time for me to add my cents to the hysteria.
But wait a minute, if the vox populi are so panic-stricken about the spike, why is it that a record 40 million of them just took automobile trips over this Memorial Day weekend -- a fleet of Interstate vagabonds that is four percent larger than last year?
If the situation edges toward a modern-day version of the Fall of Rome, as some Chicken Littles now whine, why is the economy bubbling and the stock market remaining reasonably steady in the face of the expected onslaught?
To be sure, 41 bucks a barrel for crude is alarming, and the increasing demand by growing economies like this one and China's are sure to force an upward spiral in crude prices until alternate forms of energy are developed which at this point is highly unlikely, despite whimsies about hydrogen, (which takes big-time energy to refine and transport) peanut oil, discarded raffle tickets, ad nauseum.
But after all the hand-wringing stops and the media become distracted by yet another frivolous issue, the nation will keep rolling along as before.
Why? Because the law of supply and demand -- the divine force in economies -- has yet to come into play. Example: According to Edmunds.com, the reliable automotive website, the average American has paid about $725 a month to operate a vehicle over the past five years. That number includes maintenance, car payments, depreciation, insurance, etc. plus the annual consumption of 550 gallons of gasoline. With the current jump in gasoline prices, the cost of that fuel increases about $25 a month. Delete one trip to the multi-plex, two stops at Burger King or a couple of CD purchases and it's a wash.
In other words, the American Public -- the vast, silent majority -- is more than prepared to deal with the increase despite the whiners who make headlines.
To be sure, the increase will have an effect on the overall economy, perhaps to the tune of $100 billion in extra costs, according to some economists. But in a game that generates $11 trillion annually, this will be absorbed if only the Cassandras will shut up and let the market work.
There is no doubt that two-dollar-a-gallon gas prices will affect the market for large SUV's, but so what? I own a Hummer H2, the most politically incorrect mechanical device since Hiram Maxim invented the machine gun. Therefore I may be inclined to drive my other car, a Mini-Cooper S, more frequently. Others will adjust by making a few less trips to Wal-Mart, but such alterations in lifestyle hardly border on disaster.
Perhaps your grand parents remember World War Two, when gasoline rationing went into effect, and most people were left with a few teacups of the precious liquid per month. But they still managed, not only to live reasonably well through the conflict but to create the most powerful and potent war-time economy in history.
This so-called "crisis" will have some effect, in that it might encourage development of more hybrid powerplants or perhaps the addition of more clean burning diesels to the automotive fleet. But this will be the result of supply and demand, not the meddling of the bureaucrats in Washington or the blow-hards in the media.
And kudos to the President for resisting tapping the Strategic Petroleum Reserve. That's for use in a war. This ain't war. It isn't even a skirmish when viewed against the larger picture of long-term energy conservation and development.
Those remain questions that nobody can answer.
