Here's what I thought you'd like to hear about today:

It's About OOOOOIIIIIILLLL!

1. Bill Kristol on the advantage the Democrats have on the high gas price issue
2. Juan Williams shoots down the tired old "supply and demand" argument
3. A Venture Capitalists sees an opportunity on NPR
4. Nancy Pelosi Demagogues

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It's About OOOOIIIIIIILLLLL!

I'm a rational realist who believes in economics. I didn't do so well in the one economics class I took in graduate school. But after I got a real job and was seduced into capitalism, I decided that there was something to this supply and demand stuff. Prices rise when the supply is insuffucient. Now the brainy Democrats have decided that gas prices are a terrific thing to demagogue the Republicans about, since, as the party in power, all the problems are their fault. I suppose I would do the same. But at least they could try to base their arguments on facts instead of conspiracy theories.

I'm going to play three clips next. The first two are from Fox News Sunday, with host Chris Wallace. I watched Sunday's episode on my wonderful new cell phone on the flight from Dallas to Salt Lake City tonight. Thanks to TiVo, Windows Media Player, and Windows Mobile, I can save all the Sunday talk shows and watch them where ever I want. Near the end of the show, the "Fox All Stars" sat around and talked about issues. Appearing with Chris Wallace were the usual suspects, Brit Hume, Mara Liasson, Juan Williams, and Bill Kristol . The first clip is Bill Kristol's acknowledgement that high gas prices will politically help the Democrats. He's right, of course.

Play clip

Now listen to Juan Williams go crazy with his conspiracy theories that must be the latest Democratic talking points. The prices aren't high because of supply and demand. It must be something else because the supply is the highest it has ever been. I don't know where he got that idea. I looked through all the Democratic talking points I could find, without locating any claim of high supply.

Play clip.

As Brit says, Juan is speaking economic glossolalia. Speaking in tongues. Blame the speculators. Advocate an alternative fuels policy. Impose price controls. Total lunacy.

We could have an alternative fuel policy if we wanted. We could be independent of foreign oil. All we would have to do is stop importing oil. Of course, if we did, the supply of energy would decrease to the point where massive shortages would occur and prices would go through the roof. Commerce would cease as no one could afford to ship their goods to market, drive to work, or heat their homes. Think $100 a gallon for gas. No one wants that. So instead we have the demagogues claiming that it's Bush's fault, a Karl Rove plot, and blaming the speculators. Hogwash. Prices rose because the supply can't be expanded fast enough to meet the growing worldwide demand. Don't get me started on recent congressional mandates to meddle in the fuel mix.

Long term, there is a solution. When prices rise, more smart people will enter the industry and search for ways to get rich with new energy alternatives. Listen to what Don Boudreaux at Cafe Hayek had to say today:

The Best Deal Going

How to "solve" the "energy crisis"?

We could appoint experts, give them our collective blessing and lots of our tax dollars, and set them to work on finding a solution. Or we could keep the process decentralized, letting the current high profits earned by many oil and gas producers attract entrepreneurs into the energy industry, each creatively exploring (both figuratively and literally) for new and less-expensive sources of fuel.

The latter process is certainly at work. This story ran yesterday on NPR's Morning Edition. It reports on Andrew Perlman, a young entrepreneur in Illinois who is working feverishly to find ways to convert coal into clean natural gas.

I'll interrupt Don's post to play a clip from the NPR program

Play clip.

The radio show goes on from there to describe the prospects for the venture. Now back to Don's post from Cafe Hayek.

Will Perlman succeed? He certainly thinks so. But no one really knows. He might fail utterly. Some other entrepreneur or company, pursuing hunches or visions or brand-spanking-new scientific insights might devise some entirely different means of making clean and abundant fuels.

My favorite line in this story is the one in which Perlman says that just a few years ago there were only three venture-capital firms focused on energy companies; today there are 76 such VC firms. So much money seeking ways to find new sources of energy!

Those entrepreneurs and investors who succeed will become fabulously rich; those who fail will be poorer than they would have been had they not entered the quest.

And those of us who do nothing but freely choose which fuels to purchase will benefit enormously.

I love this market process. People such as me -- people who lack even a whiff of creativity, people who are terribly risk-averse, people who lazily prefer to read novels and work at secure jobs and spend our evenings at home dining and drinking with family and friends -- just sit back and wait for profit-hungry hard-working anxiety-ridden creative entrepreneurs, each in competition with others, to find new ways to improve our lives. And we don't even have to accept what they devise. If we like it, we buy it. If not, we don't buy it.

I almost feel like a free-rider, a lazy bum, a poacher. I do nothing entrepreneurial, and yet my daily life is filled with the marvelous fruits of entrepreneurial creativity and effort. It's an incredibly good deal.

Now I hear that Bush is calling for an "investigation". Tom Maguire at Just One Minute describes it this way:

Bush announces steps on gasoline prices; from the Times:

President Bush announced a series of short-term steps on Tuesday intended to ease the rise in energy prices, including a suspension of government purchases to refill the Strategic Petroleum Reserve, a relaxation of environmental rules for the formulation of gasoline and investigations into possible price gouging and price fixing.

In addressing energy prices in a speech here, Mr. Bush joined a chorus of lawmakers who have been advocating populist-sounding initiatives to respond to surges in gasoline and crude oil prices and the threat they pose to Republicans in this fall's Congressional elections.

Well, if Carter or Clinton had done this I imagine I would have mocked it as poll-driven posturing. But a foolish consistency is the hobgoblin of little minds, so I have no doubt this Bold Presidential Vision will guide us to a brighter and more fuel-efficient tomorrow, energy-wise.

Not to end on too optimistic a note, here is Nancy Pelosi ranting about the Bush speech on her web site. Thanks to Kim Pristap of WizbangBlog for the heads up. Kim writes:

She is throwing this fit because she's trying to take advantage of a situation she has no intention of fixing. If she is so concerned about the high price of gas and home heating oil, why isn't she demanding that more refineries be built so more gas and home heating oil can be refined. If she is so concerned about oil dependence, why isn't she demanding that we open up ANWR for drilling? After all, every barrel we produce in our own country is one less barrel we have to buy from a nutball dictator. However, when she was asked about drilling in ANWR immediately after her press conference, she said no:

Listen to the best the Democrats have and weep. Thanks to The New Editor for finding the video on the congresswoman's own web site. She wants people to see this, obviously.

Play clip

Where to start. We should stop importing energy before we have a viable replacement source? How are we supposed to run a country? Raise the minimum wage? What does that have to do with gas prices. As J Lawson said in a comment to Kim's post on WizbangBlog:

When crude's at $70+ a barrel, there's just no way you're going to get sub-$2.50 gas. It's simple - the raw materials cost HAS to be figured into the end price, unless you're going to subsidise the hell out of it. Refining and transporting isn't free, and you've got to pay the employees to do it.

But if you elect Democrats in November, all of a sudden we'll be back down to $1 to $1.50 a gallon. How? Hell if I know. But vote for the Dems - they've got a plan to make it all better.

(But don't be surprised if they make it worse.)

You've got that right J.