Jacob Weisberg smells gas

Here is a very clear article in Slate about economics and common sense when it comes to gas prices. Here are some quotes:

[Slate: April 26th, 2006]

With gasoline prices now spiking around $3 a gallon—near their inflation-adjusted 1981 peak—we are witnessing stupidity on wheels. Republicans, who as incumbents fear that they will be blamed, are in a kind of frenzy to abandon free-market principles, basic economic reasoning, and increasingly, reason itself.
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If you don't have some sort of monopoly power, gouging is another word for charging the highest price the market will bear, also known as capitalism. This is why the FTC investigation has turned up nothing. What constrains filling stations from marking up gas excessively is not the fear of prosecution but competition from other filling stations.
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Of course, there is outrageous anti-competitive conduct in the petroleum industry—it's called OPEC.
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[Democrats] also have their own distinctive form of gas-price stupidity, which is to ignore the conflict between the environmentalism they espouse and the cheap fuel they demand. House Minority Leader Nancy Pelosi even moaned about high gas prices in her Earth Day statement last week.
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What none can acknowledge is that higher gas prices in the United States are a good thing. To be sure, oil at $70 a barrel causes hardships for working people and delights some of the world's worst dictators. But cheap gasoline imposes its own costs on society: greenhouse gas emissions, air pollution and its attendant health risks, traffic congestion, and accidents.

It is rather strange that a society committed to free market solutions, whenever possible, is willing to drop these principles so quickly when "the going gets tough". This increase in price of oil is actually a very generous subsidy for the development of more environmentally friendly sources of energy. As the author points out, those who support cleaner environment should actually welcome this increase in price.

The question is not whether one day we will run out of oil, or that we will find other sources of energy to replace it. The answer is a definite yes on both counts. The question should be whether we will irreversibly trash our planet in the process.

This hike in oil price may be the last chance for us to get our act together.