Wednesday, May 23, 2007

Pelosi, Honeymoon's Over

The House was busy today, passing legislation to punish something involving energy prices. There's only one place where legislation like this belongs: Venezuela. In the meantime, I hope President Bush does (finally) find his veto pen and get the ink flowing.


As for Pelosi & House Democrats. I helped vote you into power. I've been holding my tongue (pullout date). That was dumb, but this is beyond belief. 2/3 of the House apparently fails to grasp the simplest concepts underlying a market economy (though I suppose that explains Sarbanes-Oxley somewhat). But from now on, honeymoon's over. Use the majority control of the House to do smart things for this country, not stupid political gestures & not things actively bad for the economy, or else I'm going to (digitally) holler.

In other news, beautiful weather's arrived in Berkeley and life is pretty good. Have a good evening folks.

UPDATE: Never mind. Berkeley refuses to be out-crazied:

"Landlords will be required to provide free bus passes to tenants. . . . Landlords would be allowed a small rent increase (equal to $7 per month in today's costs) to pay for tenants' passes[.]"

While I enjoy the student unlimited free ride pass on AC Transit, the actual cost of a monthly bus pass for an adult is: $70.00. Not $7.00. So the proposed set of rules will require landlords to a) bundle bus passes with apartment leases, whether or not anyone wants a bus pass, but b) only raise the rent 10% of the cost of providing the potentially unused bus passes. (maybe the Chronicle contains a typo. But given Berkeley's track record, I think not.) To illustrate the extreme case, consider multi-person units. I hope the landlord is "allowed" a "small rent increase" per tenant, but even then, the landlord is now stuck losing $126/month on a two-person apartment, $252/month on a four-person. My cut-rate 8-person apartment is thankfully in Oakland, but it would take a $504/month gash out of the landlord's profits.

& finally, what if the tenants are all students, who get passes from the school? Do they get a nice $7/month increase for giggles? Does the landlord still have to provide a redundant & wasteful pass? Hopefully not. So, will landlords start having to verify their tenants are students who picked up their stickers?

"I feel like I'm taking crazy pills!!"

Ok. Hopefully this price-fixing craze (absolutely illegal when done by private actors by the way) will pass.


Blogger Tom Fletcher said...


Environmental angle. So... on an incredibly busy weekend with loads of traffic and heat (i.e., a/cs running, the House decides to... subsidize greenhouse gas emission.

Thanks. I knew you were honestly concerned about global warming.

My apologies folks, sometimes, Congress just drives me absolutely nuts.

5/23/2007 11:38 PM  
Anonymous Anonymous said...

the government should never intervene in the market. Never ever ever.

5/24/2007 1:59 AM  
Anonymous Anonymous said...

I don't understand why you're going so crazy on either front. The price gouging legislation is exceedingly narrow, and would only have effect upon the president declaring an emergency. secondly, it wouldn't simply go after high prices, but rather price gouging--those retailers who abuse their market position.
are you also against antitrust laws?

with regards to berkeley, it isn't the landlords who are subsidizing the bus passes, but new tenants, whose rent landlords can fix rent at whatever price they want.

I have no problem with greater subsidization of AC Transit and encouraging berkeley renters to take the bus rather than driving. nor do i have a problem with favoring existing berkeley residents by forcing newer residents to subsidize most of the cost of the bus passes.

5/24/2007 10:24 AM  
Anonymous Anonymous said...

As the last comment noted, the bill is quite narrow, but the public rhetoric from supporters is quite broad. In other words, it's symbolic legislation so that Dems have something to say over the Memorial Day weekend now that they've caved on the Iraq War deadline. If that's what you want your Congress to spend its day doing, then, yes, this symbolic law is a major step forward.

In general, both free-market Republicans and enviros should applaud higher gas prices when market forces demand them.

5/24/2007 11:28 AM  
Blogger Tom Fletcher said...

Anon 10:24, this has nothing to do with antitrust. Most simply, because there is no agreement. There's just one retailer, refusing to deal below a high price.

But anyway, the bill is H.R. 1252. It says that a price can be illegal if: "(A) is unconscionably excessive; and (B) indicates the seller is taking unfair advantage of the circumstances related to an energy emergency to increase prices unreasonably."

"Unfair advantage"? Not in the definitions. How to measure? Factors in the bill: " (i) grossly exceeds the average price at which the applicable gasoline or other petroleum distillate was offered for sale by that person during the 30 days prior to such proclamation;
(ii) grossly exceeds the price at which the same or similar gasoline or other petroleum distillate was readily obtainable in the same area from other competing sellers during the same period;"

A few points. (i) makes it illegal to raise prices over what you previously charged. (ii) means it doesn't even matter if there was cheaper gas available; in fact, other retailers selling for less make you guilty of selling for too much!

Yes, there's more to the bill, yes, it's narrow, but the important thing to remember is that it is a legislative attempt to fix prices. That's wrong-headed.

Worse, it's in the Senate now as S. 1263. With Boxer & Feinstein cosponsoring.


5/24/2007 1:39 PM  
Anonymous Anonymous said...

TF: "there is no agreement" between the gouging gasoline companies.

Do you really believe that?!

I vote for TF as the member of the Class of 2007 most likely to vote for whichever nutjob is the Republican nominee in 2008.

5/24/2007 2:08 PM  
Anonymous Anonymous said...

"[T]he government should never intervene in the market. Never ever ever."

Do you mean after the government is done setting up all the conditions necessary for the market to successfully function. There would be no "market" in the sense we normally think of if the government weren't constantly at work educating the workforce, building roads and other public works, ensuring the working of the payments system, etc., etc., etc. But once the big companies get all of these public subsidies, it is odd you Club for Growth-types don't think these companies owe anything to the government or the people living in the communities they affect.

My knee-jerk reponse is that you guys say this stuff because you are all planning to be rich law firm partners and think it is in your interest. But that doesn't explain Tom Fletcher's support for Prop. 90, which would have screwed up a lot of things that affect everyone who doesn't travel exclusively by helicopter.

5/24/2007 2:16 PM  
Anonymous Anonymous said...

antitrust laws prohibit more than just agreements. See ss 2 of sherman act, ss 3 of clayton act. I'm sure there are more too.

5/24/2007 2:35 PM  
Blogger Tom Fletcher said...

Yes, 2:08. I do believe that.

5/24/2007 2:38 PM  
Blogger McWho said...

2:08 if you have anything to back up your argument that the oil companies collude like you think they do, let us know.

Oil companies don't have to collude; they have a product that is extremely inelastic to american consumers. Honestly demand is far in excess of the price at the moment...the price could probably go to $5 per gallon before we see a measurable reduction in consumption.

5/24/2007 4:18 PM  
Anonymous Anonymous said...

What about better enforcement of "market manipulation"? The sudden shutting down of refineries seems reminiscent of the sudden shutdown of power plants when Reliant & Enron were gaming the California energy market.

5/24/2007 6:57 PM  
Anonymous Anonymous said...

I don't think oil companies have that degree of control. Energy has to be tightly controlled, since the government creates power monopolies. Oil is still least like coke and pepsi are.

5/24/2007 10:08 PM  
Anonymous Anonymous said...

Exactly, 6:57. These companies are old pros at bilking us. They know how to game the markets in ways they won't get caught, especially with anti-trust enforcers asleep at the wheel for the past few decades. There's a lot they can do to raise prices short of the obvious moves, such as starting wars in the Middle East.

5/24/2007 10:58 PM  
Blogger Tom Fletcher said...

Seriously 10:58? Enforcers asleep for decades? Starting wars to raise price of gasoline?

You have a lot more faith in people's ability to keep secrets than I do.

5/25/2007 5:32 AM  
Anonymous Anonymous said...

It's not that oil companies are keeping huge secrets or entering into explicit agreements. They just know how to work the system. Each of these oil companies employs hundreds or even thousands of people working in intelligence. They know how to figure out what issues matter for them and how push for the things they want. They can't get the President to invade a country but they can certainly encourage action on a range of issues. Over time, they will have an impact on various issues in a way that helps their bottom line. There is no smoke-filled room; if you're one of the most profitable companies in history you don't need one. Especially if you are part of an oligopoly dominating a key--if not the key--industry in the modern world.

5/25/2007 10:48 PM  

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