The Arrogance Of Hillary

I am continually amazed by the naivety of people who vote Democrat.  They listen to a women like Hillary say this:

Hillary Clinton predicted Saturday that just electing her President will cut the price of oil.

When the world hears her commitment at her inauguration about ending
American dependence on foreign fuel, Clinton says, oil-pumping
countries will lower prices to stifle America’s incentive to develop
alternative energy.

“I predict to you, the oil-producing countries will drop the price
of oil,” Clinton said, speaking at the Manchester YWCA. “They will once
again assume, once the cost pressure is off, Americans and our
political process will recede.”

And somehow, someway, they believe her.  They believed Nancy when she said this last May:

“This Congress, under the Democratic leadership, is working to make up for years of inaction, taking America in a new direction that helps bring down the cost of gas and promotes energy independence.  Energy independence is essential to reducing the price at the pump.

“In the first 100 hours of the new Congress, the House passed legislation to roll back $14 billion in subsidies for Big Oil, when Big Oil was already enjoying record profits.  Our proposal reinvests that money at home in clean alternative fuels, renewable energy, and energy efficiency.

~~~

“A number of House committees are taking action, holding hearings over the next few weeks to take a comprehensive look at how we can fight price gouging; the development of clean alternative fuels; the impact our dependence on foreign oil has on our economy; and how we can put new technologies to use to achieve greater energy efficiency

Nevermind that gouging is defined as prices that are extremely excessive, or sellers raising prices to take unfair advantage of market conditions, or when the price exceeds the price obtained in the same area.

None of what we have seen is gouging.  In fact at the current price of around $3.10, adjusted for inflation, the price is less then what we were able to buy gas for in 1981. (Don’t believe me?  Price here, adjust here)

But I digress.  Nancy and her Congress accomplished nothing during their reign except to keep the price of gas high with all the taxes they love to add to it.  The evil oil companies made about 13 cents of profit on the gallon while the fed’s tacked on 18.4 cents and here in California they tacked on another 40.2 cents of tax.

But its the big bad oil companies.

And Hillary, Oil-producing countries don’t set the price of oil. They
are just one component among many in the global market.  A market that is quite large.  It’s basic economics.  Supply and demand.  Redstate:

Oil-producing countries don’t set the price of oil. They are one actor among many in a global market that is extremely large, extremely fast, and full of contradictory signals.

In addition, there are precious few countries that have enough incremental production capacity to actually pump significantly more than they do now. In fact, the only ones I can name are Saudi, Kuwait, and maybe the Emirates. Just about every other sovereign oil producer treats oil revenue as free cash flow, without considering the need for continuing capital investment.

The oil-producing countries would have a very hard time reducing oil prices even if they were inclined to try. There are too many buyers out there and too much demand. And a not-small amount of the demand comes from speculators instead of actual energy users, which ties the oil-price picture tightly to markets that are superficially not even related.

Redstate also notes the incredible arrogance of a women to believe that all the players in a four-trillion global market are going to be intimidated by her:

And again, Clinton vastly overrates her own power by postulating that, simply by coming to office with a promise to pursue oil-alternatives without regard to cost, the oil producers will say “Uh oh, we need to cut prices now, this lady is serious and we need to fear her.”

As we’ve seen, the oil producers aren’t the only ones making these decisions. There’s a whole market out there too. And they are swayed by their perception of reality, not by the words of one overconfident politician.

If America honestly embarks on a policy of developing expensive energy alternatives, the world price of oil is more likely to rise rather than fall, all else equal.

Think of it as a reverse-substitution effect. If you find a cheaper alternative to a constrained commodity (which free markets do naturally), it has the effect of reducing demand (and prices) for the commodity being replaced.

But if you replace a commodity with something more expensive (considering all the aggregate costs and inefficiencies of developing alternatives before the markets are ready), then the opposite will happen.

Basic economics, something she obviously never learned about during her “prestigious” schooling.  But the fact remains that if elected she would institute her universal health care AND raise taxes even more on oil to pay for expensive alternative fuels, which would in the end lead us into a disastrous economy just like Jimmy Carter’s economy.