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Sunday
Sep142008

Canute, Energy, and Natural Laws

Politics has been unusually intense this week, and many new themes of varying worth have echoed around the public square. One meme that surfaced held that belief in creation invalidates one for higher office. The argument runs that if a candidate is unable to understand natural law and science, as evidenced by creationism, then they are unfit to govern in the modern world. This week, numerous politicians showed ignorance of other natural laws and natural systems, ones whose effects are more immediate. I am more concerned with the immediate harm caused by those who ignore natural laws, as they did this week, that have been confirmed by repeated experiment.

The laws I am speaking of are those of supply and demand, and that price should reflect scarcity and value, rather than cost. Those who ignore this iron law can always make things worse.

King Canute was surrounded by a flattering court who magnified his power and magnificence in their speech, claiming that he could control the forces of nature. When some claimed in their over-the-top praise that he could control the tides, Canute decided to teach them a lesson. Canute had his throne carried to the beach at low tide, had a proclamation read requiring the tide to stay out, and held court surrounded by the flatterers. Predictably, all were soon flooded; one can only hope that some of the advisors were swept away. I hope Canute received better advice thereafter.

This week, government actions that created wide-spread shortages and economic dislocation in the Carolinas.

Local gas markets were stirred up with the prospect that hurricane disruption of gas production would soon cause shortages. Panic buying created runs on gas stations as drivers topped off their tanks before the weekend. Many convenience store owners increased their prices, a healthy response that reduces demand and encourages drivers to allocate gas use only to high value activities during a time of scarcity.

The governors of each of the Carolinas (and perhaps elsewhere) invoked emergency powers to prosecute those who raise prices. The predictable effect was that stations began running out of gas. The economic dislocation spread, as local service companies, unable to fuel their trucks at any price, began holding off all customers until next week. Tradesman were effectively laid off for the day. The underemployed now have full tanks that they do not need, and the regularly employed stayed home. The governors Easley and Sanford demonstrated that both parties can make bad situations worse through ignorance of natural laws.

Somehow energy befuddles public agencies, public discourse, and, obviously, governors. Energy companies, for the most part live in a bizarre world wherein prices are determined by approved costs rather than by value delivered. Decisions, on technology, and on resource allocation are made by fiat.

As I drive by stations with no gas, I know that neither the hurricane, not the station owner, nor the distributor is to blame. I blame Easley, and the latest of the many uneconomic decisions he has sold to the state of NC. I wonder when the pundits who are so forceful in arguing about evolutionary biology will consider whether own economic innumeracy poses a greater risk.

The local governors are all wet. Unlike Canute, they do not recognize why.

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