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Cato Daily Dispatch for April 8, 2003

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Gas Prices Dropping
Postal Service Looks to Eliminate Routes to Counter Slump in Funds
North Korea Accuses U.S. of Planning State-Sponsored Terrorism

Gas Prices Dropping

"Gasoline prices are continuing to decline around the country with the progress of U.S.-led forces in Iraq and a surge in crude oil flows around the world," according to The Washington Post. "The increased oil output has offset the shutdown of Iraqi oil fields during the war.

"Crude oil for May delivery fell 66 cents, or 2.3 percent, to $27.96 a barrel on the New York Mercantile Exchange yesterday. Oil prices on the exchange are 30 percent below a 12-year high of $39.99 a barrel reached on Feb. 27."

Weeks ago, when gasoline prices were continually rising, Jerry Taylor and Peter VanDoren, Cato director of natural resources studies and editor of Regulation magazine, respectively, examined whether oil companies were gouging consumers. "The industry says it's supply and demand. Consumer activists say it's gouging. Who's right? Well, both are," write Taylor and VanDoren in "Balance Sheet of Gouging", an op-ed published in The Washington Times.

"In reality, price gouging--like spinach--may be unappealing at first bite but it's good for everyone in the long run," they write. "Gougers are sending an important signal to market actors that something is scarce and that profits are available to those who produce or sell that something.

"Gouging thus sets off an economic chain reaction that ultimately remedies the shortages that led to the gouging in the first place. Without such signals, we would never know how to efficiently invest our resources. Moreover, we would have no idea what to conserve. It's no exaggeration to state that, without such price signals, our economy would look like Cuba's."

Postal Service Looks to Eliminate Routes to Counter Slump in Funds

"The U.S. Postal Service reached an agreement with its largest letter-carrier union to study new ways to review and eliminate mail-delivery routes amid a slump in most kinds of mail," according to The Wall Street Journal.

"The deal is aimed at reducing complaints from carriers who have accused their bosses of going too far during inspections to justify the elimination of routes. In the past year, the Postal Service has eliminated more than 1,250 mail-delivery routes in cities across the country, assigning stops along those routes to other carriers."

"First-class mail, the major USPS cash cow, is stagnant," writes Cato Adjunct Scholar Edward Hudgins, in "Privatize the Postal Service" a Cato Daily Commentary. "More people in the future will be paying bills electronically, further reducing postal revenues. The postal service will lose more than a billion dollars every year for at least the next decade."

In "Postal Ploy: 'Give Us Your Money or Don't Get Your Mail!'", Hudgins writes that "a private Postal Service, without special privileges, would have an incentive to operate efficiently and to offer innovative services that profit its stockholders, provide opportunities for its workers, and give customers the best service for the best prices."

Hudgins is also the editor of the Cato book Mail @ the Millennium: Will the Postal Service Go Private?

North Korea Accuses U.S. of Planning State-Sponsored Terrorism

"On the eve of a U.N. Security Council meeting on North Korea, Pyongyang on Tuesday accused the United States of planning 'military terrorism 'against the North over its nuclear ambitions," reports Reuters.

"The impoverished communist state--officially named the Democratic People's Republic of Korea--has accused Washington of pressing for the Security Council to take up the nuclear issue as a prelude to war once the Iraq conflict is over."

The best strategy for the United States to respond to North Korea is to reduce the U.S. military presence in South Korea and Japan and give those countries the green light to begin developing nuclear weapons, according to Ted Galen Carpenter, Cato Institute vice president for defense and foreign policy studies, in "Options for Dealing with North Korea". Carpenter writes, "It is time--indeed, it is well past time--to tell Japan and South Korea that they must provide for their own defense and take responsibility for dealing with security problems in their region."

Wyatt Dubois, editor, wdubois@cato.org