Tag Archives: Consumer

News

How changing prices signal buyers and sellers in a free market economy

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Here’s a lesson in capitalism from the New York Times. (H/T ECM)

Excerpt:

The oil industry has been on a hot streak this year, thanks to a series of major discoveries that have rekindled a sense of excitement across the petroleum sector, despite falling prices and a tough economy.

These discoveries, spanning five continents, are the result of hefty investments that began earlier in the decade when oil prices rose, and of new technologies that allow explorers to drill at greater depths and break tougher rocks.

“That’s the wonderful thing about price signals in a free market — it puts people in a better position to take more exploration risk,” said James T. Hackett, chairman and chief executive of Anadarko Petroleum.

And what do we learn from this? Do oil prices go up because of greed? No.

When supply is low or uncertain, but demand is high, then prices must rise. Rising oil prices signal consumers to curtail their consumption, and they signal producers to invest more and take more risks to find more oil.

The government must not interfere to set prices lower when prices rise due to a shortage. Lower prices means that producers will not invest or take risks in order to find more oil for consumers. We have to let producers have their profits in order to for them to invest and take risks to find more oil. And when more oil is found, the price of oil will go down naturally, without the government having to get involved. The more government gets involved, the more opportunity there is for corruption.

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News

Canada signs free trade deal with Panama, tracks Russian subs on east coast

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Two pieces of good news for our neighbor to the North.

First, while Obama has been embracing protectionism, Canada has signed yet another free trade deal.

CTV News reports:

Canada has signed off on a free-trade agreement with Panama, which will immediately slash tariffs on a number of Canadian exports.

Excerpt:

[…]The new agreement with Panama will cut more than 90 per cent of tariffs on various Canadian exports, including agricultural exports and high-tech machinery. Any remaining tariffs will be eliminated within 10 years under the terms of the deal.

Beef producers will also benefit, as Panama will lift a six-year-old ban on Canadian beef as part of the deal, CTV’s Roger Smith said Tuesday.

[…]Beyond reducing tariffs on export goods, the deal will help Canadian businesses gain greater access to the Panamanian market, Smith said.

[…]Panama is the eighth country to reach a trade pact with Canada in the past year. Canada has also reached trade deals with four European countries and Peru. Similar deals with Colombia and Jordan have been signed, but not implemented.

Previously, I wrote about Obama’s naive protectionism. Anti-free-trade policies (= protectionism) is the kind of policy favored by people who do not know the first thing about economics. Being anti-free-trade is right up their with being pro rent-control. We are talking about amazing levels of economic ignorance, coupled with pandering to his ignorant special interest groups.

CTV also reports that Canada’s anti-submarine warfare (ASW) aircraft detected nuclear-powered (= quiet) Russian attack submarines patroling off the east coast.

Frankly, I am surprised that Canada was able to detect Akula class SSNs by using airborne ASW aircraft. I’ve used the S-3 Viking and the P-3 Orion fixed-wing platforms before, (as well as helicopters), and this CP-140 doesn’t look much different. If I had to bet, I would bet that they got the contact on the SOSUS network and that this press release is fudging things to make the Canadian forces look more effective than they really are.

Excerpt:

It’s unclear whether Canada took the initiative to have a CP-140 Aurora patrol plane watch the vessels, or whether there was a request from the U.S. Northern Command which tracks submarines.

My guess is that this is a SOSUS contact that was delegated to the Canadians for PR purposes. I just don’t believe that you are going to get a contact cold on an Akula-class attack submarine from a fixed wing aircraft. Akulas are quiet. These are not SSBNs like a Typhoon class – they much smaller. ASW aircraft are usually brought in after a sonar contact – otherwise you’re just wasting sonobuoys looking for a needle in a haystack.

Did you guys miss the story from earlier this year about Canada chasing off Russian bear aircraft?

Commentary

New Heritage Foundation study says cap-and-trade will kill jobs and the economy

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New study from The Heritage Foundation, my favorite think tank! (H/T Hot Air)

This image tells all:

Job losses per year if cap and trade passes.
Job losses per year if cap and trade passes.

Summary of the effects: (adjusted for inflation to 2009 dollars)

  • Cumulative gross domestic product (GDP) losses are $9.4 trillion between 2012 and 2035;
  • Single-year GDP losses reach $400 billion by 2025 and will ultimately exceed $700 billion;
  • Net job losses approach 1.9 million in 2012 and could approach 2.5 million by 2035. Manufacturing loses 1.4 million jobs in 2035;
  • The annual cost of emissions permits to energy users will be at least $100 billion by 2012 and could exceed $390 billion by 2035;
  • A typical family of four will pay, on average, an additional $829 each year for energy-based utility costs; and
  • Gasoline prices will rise by 58 percent ($1.38 more per gallon) and average household electric rates will increase by 90 percent.

FYI, current GDP is around 14 trillion per year. The current labor force is around 130 million (non-farm).