Tag: gas prices

Red Team, Blue Team, and Gas Prices

The Washington Post puts public opinion on gas prices in stark red and blue:

Pretty clear Red Team/Blue Team answers. Republicans in 2006 accepted that there wasn’t much the president could do to reduce gas prices, but most of them think Obama could. Democrats show an even sharper shift; they overwhelmingly said that Bush could bring prices down, but few expect Obama to do so. I hope the fact that both Independents and Americans as a whole are 12-13 points less likely to think that presidents set gas prices is a sign of improvement in general economic understanding.

Back around 2003 or 2004 a colleague was escorted through the hallways of CNN by a junior staffer or intern, who asked him, “Do you think Bush is raising gas prices now so he can lower them before the election?” With perceptions like that among budding journalists, is there any hope for better public understanding of economics?

For examples of informed and nonpartisan analysis of gas prices, check out

As Used-Car Prices Soar, ‘Clunkers’ Are Missed

Cato scholars have been appropriately scathing about the federal government’s 2009 “cash for clunkers” program, which paid several billion taxpayer dollars to have older cars scrapped and their engines destroyed, with owners getting vouchers toward new vehicles. When Chris Edwards nominated cash-for-clunkers as the “dumbest government program ever,” he listed among its effects: “Low-income families, who tend to buy used cars, were harmed because the clunkers program will push up used car prices.”

Guess what’s the newest trouble to hit the car business? As news outlets around the country are reporting, the price of used cars has lately soared to a modern-day record, with some cars commanding more used than they sold for when new. News accounts commonly finger the Japanese earthquake and high gas prices as reasons, but there are some problems fitting either reason to the case. While the earthquake affected the supply of new cars, it’s the previously driven kind that has scored the more impressive price jump. And while the rise in gas prices would explain a relative shift in buyer demand from SUVs and trucks toward smaller vehicles – which has indeed happened – the strength of the used-vehicle market lately has been such that even the thirstier vehicles have advanced in price, $4 gas or no.

No doubt there are multiple reasons for the price spike, including the severe general slump in new-auto sales in recent years, which has reduced the volume of newer cars coming onto the resale market. But – as Washington scrambles to take undeserved credit for whatever passes for normalization in the auto business these days – it’s worth remembering that an artificial scarcity of used cars isn’t just bad for the poor as a group: it’s bad in particular for the upwardly mobile poor, since in most of the country landing a job means needing to line up transportation to get to that job. When it suddenly costs $6,000 instead of $3,000 to get wheels, the move from unemployment to a paying job faces a new and discouraging barrier.

There’s a further irony too. Just as the federal housing stimulus lured many buyers into unwise house purchases at a time when home prices still had a good distance to fall – leaving them worse off in retrospect – so many owners who jumped for the cash-for-clunkers program would have been better off holding on to their cars a while longer. At least that’s what one might conclude from what Frederick, Maryland used-car dealer Robert Cox told his local paper, the News-Post:

People who got $3,500 for the cars they turned in would probably get $5,000 to $7,000 for the same trade today, Cox said.

Nice going, Washington.

Thursday Links

Friday Links

  • What are Republicans doing to stop ObamaCare? Not much.
  • Conflating the Taliban with al Qaeda isn’t helping our foreign policy dialogue.
  • “Sitting in a Volt that would not start at the 2010 Detroit Auto Show, a GM engineer swore to me that the internal combustion engine in the machine only served as a generator, kicking in when the overnight-charged lithium-ion batteries began to run down.”
  • The new issue of Regulation looks at price gouging, soda taxes, the Durbin Amendment, and more.
  • Who should decide when we tap into strategic oil reserves: The president? Or market forces