Sunday, May 25, 2008

Obama Accidentally Gets Economics 101 Concept Right?

Sen. Barack Obama isn't exactly a fan of capitalism and market forces, but he notes that the rising gas prices may be changing consumer preferences when buying and using cars. Have we detected a sign that Barack Obama recognizes that the market works?

Perhaps.

Let me spell it out clearly for the Obama camp if they haven't quite understood things.

The market - and we're talking the oil market - is affected by supply and demand worldwide. Under the current situation where demand outstrips supply, prices rise. Those rising prices appear to be causing a change in consumer habits by altering the kinds of vehicles sought, and may be leading to changed driving habits.

None of this is the result of the US government changing a single policy or forcing consumers to buy econoboxes through mandated corporate mileage requirements.
Obama, an Illinois senator and the front-runner for his party's presidential nomination, has made fighting climate change a key issue of his campaign, and as fuel prices soar, he has repeatedly called on car makers to increase fuel efficiency standards.

Without specifically telling Americans to stop buying gas-guzzling sport utility vehicles, the Illinois senator said higher fuel prices would lead to a shift.

"We've seen that this quarter. People are changing their behavior and we've seen a slump in the sales of SUVs and big trucks and a drastic spike in cars both medium size and small," he told reporters on his campaign plane.

Obama put responsibility on car makers to make vehicles more fuel efficient.

"They've done a better job of investment than they have in the past. There's still more work to do, and the federal government should help them do it," he said.

Obama, who spends most of his time traveling around the country on a plane and in cars driven by his Secret Service agents, does have a car of his own that is environmentally friendly.
Those vehicles used during the campaign are usually large SUVs. I don't begrudge the guy for that - he's got an entourage and the large SUVs are safer than the smaller cars, to say nothing of the fact that they're likely armored for his protection.

However, for him to say that he doesn't drive it much these days is funny considering that he's spending much of his time on the road campaigning and being chauffeured by his team from one event to another.

Still, he continues to argue for the changed fuel economy regulations, even though the market is already moving in that direction without any government interference. Companies that make products that people want to buy will benefit. Those that are slow to respond, or those who are overly reliant on SUVs and trucks for sales, will find their sales hit hard (Chrysler, I'm talking about you).

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