Kenneth C. Davis has made a great living with his “Don’t Know Much About” books. It began with Don’t Know Much About History. It became a mega-bestseller. He went on to write books on the presidents, the Bible, geography, the Civil War, the solar system, mythology, and other subjects.
Davis has not written on what people don’t know about economics. If he decides to write on the topic he can begin with this statement by President Obama on why he is opposed to building the Keystone XL pipeline:
“Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else. . . . That doesn’t have an impact on U.S. gas prices.”
One of the basic principles of economics is supply and demand. If there is more demand for a product than there is supply, the price goes up. Think gold and one-of-a kind works of art like those of Vincent van Gogh and Picasso.
If there is more supply of a product than there is demand, the price goes down. Think the comic book glut of special issue comic books of the 1980s and 1990s. They now sell for pennies on the dollars while a near mint copy of the first Superman comic — Action Comics No. 1 (1938) — sold in 2014 on eBay for $3,207,852.
There are estimated to be only 50 to 100 copies in existence out of a print run of 200,000 copies and only one issue graded 9 out of 10 in terms of condition.
It’s that simple. It only requires politicians and Ph.D.-level economists to confuse everybody. Even drug dealers know the basics of economic theory.
If more oil is made available to a global market, the price of oil will come down. It doesn’t matter if a single drop of Canadian oil is ever refined in the United States or used for American consumption.
The oil will make its way to markets around the world where it will have an impact on supply, thus, lowering prices in the United States and elsewhere.
Once opposed by nearly all Democrats, but with election of Democrat Senator Mary Landrieu of Louisiana at stake, the Democrats are softening on their opposition to the Keystone XL pipeline. Their change of heart is pure politics:
“The about-face by Democrats in support of the Keystone XL pipeline as the $8 billion project nears a critical vote in the Senate next week smacks of ‘100 percent pure political maneuvering,’ Sen. Ron Johnson told Newsmax on Friday.
“‘What’s remarkable to me is that Mary Landrieu has the gall to say in interviews that there’s no politics involved in this at all,’ the Wisconsin Republican said, referring to the embattled Louisiana Democrat whose political future may depend on her being able to get the 60 votes needed to approve the pipeline. ‘That’s all this is.’
“The first-term Johnson then likened Landrieu’s remarks to those disparaging Americans by Obamacare architect Jonathan Gruber.
“‘It just proves that what Jonathan Gruber was saying is true: Democrats truly believe that the American public is so stupid that they can stand up and say, “Oh, there’s no politics in this” and actually believe that the American public — and the folks in Louisiana — would believe this,’ he said. ‘It’s unbelievable.’”
Actually, it’s not unbelievable. It’s politics as usual in Washington.
The Keystone XL pipeline has another benefit of energy independence if the Middle East blows up and oil supply channels are cut off.
Canadian oil is an insurance policy.