One of the benefits of having me for Micro is that you'll probably feel confortable emailing me in a few years with questions for some zero-priced consulting. Here's an email I received today from a former student.
My response was that we have not seen deregulation in the oil markets and that, if anything, regulations have increased, with laws requiring (say) corn-based fuels and new grades requirements for gas, to say nothing of regulations that have allowed exactly zero new oil refineries to be built in the United State since the 1970s (although I have been told that one is now being built). Lobbyists haven't exactly been losing their jobs (if only!), and environmental regulations are often embraced by large firms because they hinder competition from competitors who cannot pay regulatory costs. Less competitive, and more monopolistic, markets result. Speculators are hardly a factor here. If they were such a force in these markets, then why have prices fallen so precipitously over the last few months?
What's more, it is important to think critically about such issues. It is intellectually weak to decide that when markets swing, then it must always result from deregulation. In truth, there is real deregulation (good) and re-regulation that goes under the name of deregulation (bad).
Which brings to mind another question to think about. Why are rising prices bad when we are talking about oil and gas markets, but good when we are talking about housing and stock prices? Is this inconsistent? Email me your thoughts, and we'll discuss these issues in class.
I took one of your economics courses a few years ago I consider you to be a high authority on all things economics-related. So, I wanted your opinion on a recent discussion I had with a co-worker. It was about the deregulation of the oil industry. He maintains that this deregulation sparked the upward movement of oil prices leading, obviously, to rising gas prices. I know very little about deregulation of anything so I didn't argue with him, I just listened. I His definition of deregulation was the introduction of barrels of oil to the stock market. My very small economic background led me to believe that deregulation was good for lowering prices because the government was lessening its intrusion on whatever industry. What is an accurate definition of deregulation? Has this participated in the rising prices of oil (which have actually been falling)? What kind of deregulation occurred in the oil industry and when? I sent this email to Dr. Walter E. Williams and he directed me to an article which stated that the prices of oil dropped during the years leading up to the end of the 90s. Why did oil go up so quickly during and after 2005? Is it all related to supply or just the fear by speculators that supply was low? Thanks for your time.How would you respond? The essence of the question deals with what's affecting supply in oil markets, and is deregulation a major factor.
My response was that we have not seen deregulation in the oil markets and that, if anything, regulations have increased, with laws requiring (say) corn-based fuels and new grades requirements for gas, to say nothing of regulations that have allowed exactly zero new oil refineries to be built in the United State since the 1970s (although I have been told that one is now being built). Lobbyists haven't exactly been losing their jobs (if only!), and environmental regulations are often embraced by large firms because they hinder competition from competitors who cannot pay regulatory costs. Less competitive, and more monopolistic, markets result. Speculators are hardly a factor here. If they were such a force in these markets, then why have prices fallen so precipitously over the last few months?
What's more, it is important to think critically about such issues. It is intellectually weak to decide that when markets swing, then it must always result from deregulation. In truth, there is real deregulation (good) and re-regulation that goes under the name of deregulation (bad).
Which brings to mind another question to think about. Why are rising prices bad when we are talking about oil and gas markets, but good when we are talking about housing and stock prices? Is this inconsistent? Email me your thoughts, and we'll discuss these issues in class.
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