The same laws of economics apply to the price of oil – and, for that matter, wheat. These are scarce resources. The fact that more people want them is why they are more expensive. When a Labour MP last week cried that petrol should be made cheaper by the government “because it is a necessity”, he might as well have said two plus two equals five. When will these fools be sent for compulsory re-education before they do more damage?
A lesson here is offered by the recent experience of wheat prices, caused by a price hysteria in March. The French demanded that the European Union throw more subsidy at their farmers – confirming my view that a French economist is a contradiction in terms.
Although we would make an exception for M. Bastiat.
Price always tends to bring supply and demand into equilibrium, if left free to do so within an intelligent regulatory framework. Subtleties and complications surround this principle but, for starters, “That is all you know, and all ye need to know,” said the poet.
You can abuse the market, distort it, subsidise it or tax it, but it is rooted in human nature and will prove your master in the end. Far better to add economics to the core curriculum in every school and make it a qualification for any who would dare to embark on the profession of government.
Or, in the phrase which I stole from the Angry Economist, you can ignore economics, but economics isn\’t going to ignore you.