Rising Oil Means What?
by Lawrence Kudlow
Permit me to take a contrarian view on the oil price shock. I say three cheers for higher energy prices. Why? Because I believe in markets. When the price of something goes up, demand falls off (call it conservation) and supply increases (call it new production). We're seeing a tectonic shift.
As Dan Yergin has advised us, energy supplies in the next few years will explode. Now the public is even favoring nuclear power. And the government is stepping out of the way by giving FERC the authority to override localities who oppose nuclear power, liquefied natural gas or other forms of energy.
Meanwhile the impact on the economy has been negligible, at least so far. And the Fed has prevented oil inflation from spreading to the rest of the economy. So much so that I think they should quit raising rates while they're ahead.
Meanwhile the spread of global capitalism to places like China, India, eastern Europe and elsewhere (which is a very good thing for world prosperity) is the main cause of the spike in energy.
So supply will rise exponentially in the years ahead, demand will slow a bit and we'll all live happily ever after. The moral of this story: markets work if you let them.
http://lkmp.blogspot.com/2005/08/tectonic-shift.html
Lawrence Kudlow is a former Reagan economic advisor, a syndicated columnist, and the host of CNBC’s Kudlow & Company.
Permit me to take a contrarian view on the oil price shock. I say three cheers for higher energy prices. Why? Because I believe in markets. When the price of something goes up, demand falls off (call it conservation) and supply increases (call it new production). We're seeing a tectonic shift.
As Dan Yergin has advised us, energy supplies in the next few years will explode. Now the public is even favoring nuclear power. And the government is stepping out of the way by giving FERC the authority to override localities who oppose nuclear power, liquefied natural gas or other forms of energy.
Meanwhile the impact on the economy has been negligible, at least so far. And the Fed has prevented oil inflation from spreading to the rest of the economy. So much so that I think they should quit raising rates while they're ahead.
Meanwhile the spread of global capitalism to places like China, India, eastern Europe and elsewhere (which is a very good thing for world prosperity) is the main cause of the spike in energy.
So supply will rise exponentially in the years ahead, demand will slow a bit and we'll all live happily ever after. The moral of this story: markets work if you let them.
http://lkmp.blogspot.com/2005/08/tectonic-shift.html
Lawrence Kudlow is a former Reagan economic advisor, a syndicated columnist, and the host of CNBC’s Kudlow & Company.
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