144. How the Grinch Stole the Oil Glut by Joe Queenan
How the Grinch Stole the Oil Glut
Economists can find a downside to anything
By JOE QUEENAN
Dec. 11, 2014 12:02 p.m. ET
Until recently, the crash in oil prices was widely perceived as a Christmas present for consumers. More money for gifts, food, warm clothing, toys and, for that matter, gas. Who wouldn’t rejoice?
Economists, that’s who. Geopolitical experts. And anyone who owns stock in oil companies. No sooner did ordinary people start celebrating their cash windfall than the Grinch showed up and started lecturing them about the dark side of lower oil prices. All that glitters is not gold, the experts told the public. Always look a gift horse in the mouth. Don’t you nitwits know anything?
Here’s what the experts have to say about plummeting oil prices. Lower fuel prices will lead to a consumer spending binge and that will lead to inflation. The drop will also destabilize foreign economies, contributing to political unrest, and discourage energy companies from looking for new sources of oil. It will hamper the development of alternative forms of energy. It will encourage consumers to buy gas-guzzling trucks and SUVs. It will encourage people to drive more, wrecking our highways and costing us billions of dollars in lost productivity because of employees stuck in traffic jams on I-95 or the 405.
That’s not all. The drop in fuel prices will prod the Fed to raise interest rates, traumatizing the bond market and sabotaging retirees’ golden years. It will lead to even more crowded planes and delayed flights. It will make people even less likely to use public transportation. It will wreck the staycation industry because everyone will go back to vacationing in Antigua instead of the local Motel 6. It will help the Chinese climb out of their economic rut, and nothing that helps the Chinese can possibly be good for us. In short, we were much better off when gas was $4 a gallon.
Poorly informed laymen might think that economists are only saying these things to be mean or because they couldn’t care less about plummeting oil prices, since they all bike to work or own Priuses. But this is not true: Economists are coldblooded rationalists who would react the same way if any other industry suddenly slashed prices by 40%.
“On the surface, massively reduced movie-ticket prices might seem like a boon,” an expert might say. “But cheaper tickets will attract larger crowds to Sylvester Stallone films that would otherwise bomb. This will lead to ‘The Expendables XI’ and ‘Rambo: Thirty-first Blood.’ Lower ticket prices will bring in far more teenagers, who will drink a lot of soda loaded with sugar, which will wreck their teeth, burdening our massively overextended dental-care system.”
Economists would react the same way if candy makers slashed prices 40%. “Cheaper candy means fatter kids,” a typical economist would argue, “which means higher clothing prices because you need a lot more denim to cover their humongous butts. Higher clothing costs lead to higher wages, which lead to inflation, which leads to labor unrest in developing countries where most of the clothes are made, which destabilizes the global economic system. And that helps the Chinese. The last thing we need in this country is lower prices on candy. Especially Swedish fish.”
Massively reduced milk prices? Makes babies fat and leads to heart disease. Slashed prices on hats? Even more ironic hipster fedoras. A 40% plunge in the price of a college education? It will simply encourage more dumb kids to get a college degree, further debasing the coin of the realm.
Finally, how about a huge reduction in the cost of tickets to see Lynyrd Skynyrd or Bob Dylan, allowing impoverished baby boomers to enjoy the heroes of their misbegotten youth one last time? “It will only encourage more reunions,” economists will argue, taking into account the fitness of a society in which AC/DC has just released a new record and Journey still exists. “We’ll never get these guys to retire.”