Saturday, November 05, 2005

An Economics Lesson

In addition to approving in the Arctic National Wildlife Refuge (ANWR), the Senate recently voted 86-13 to restrict any oil produced from the ANWR in Alaska from being exported. All oil from the ANWR will be used domestically, in order to reduce our dependency on foreign oil.

A little bit of economics training should be a requirement for all members of Congress, Parliament, etc... It might keep them from producing useless legislation such as this in order to gain political points from the electorate.

The lesson our honorable senators need to learn is that oil is fungible - that is, one barrel of oil is pretty much equivalent to another barrel of oil. Oil produced in other states can still be exported, but the precious Alaskan oil must remain in the country. The likely result is that exports from other regions of the US will increase while ANWR oil is used domestically, accomplishing nothing other than political granstanding. The same fungible properties of oil mean that with the global market for oil, it doesn't really matter where we get our oil from, we can't really hurt a particular producer (say, Iran) by not importing their oil.


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