Friday, 29 February 2008
Free Market Magic
« The Robin Hood Bill | Main | No Excuse Too Small »Once again, the free market works its magic.
Rising gas prices are hitting CNN.com readers in the wallet, and many say they are staying in and scaling back spending to try to keep up.
Most readers said they were driving as little as possible, cutting back on shopping and eating out and other discretionary spending.
Travis Grim, of Dallas, Texas, said he moved so that he could be closer to work. "Now I'm in walking distance. I'm sure towns and businesses will see a surge as people leave the suburbs for relief," he wrote. Other readers said they changed jobs, or sold their homes so they could have a shorter commute.
Many readers said they traded their trucks and SUVs for more fuel efficient vehicles. Christine J., of St. Louis, Missouri, said she was also considering a swap.
While many may cringe in horror at the thought of these poor people, I think it is a good thing. It is the market correcting itself. As demand for gas rises, the price for gas increases. The increase in the cost of fuel does 3 things. It creates demand for more fuel efficient cars (without government involvement). It drives down demand (people walking, riding bikes, taking bus, etc). It provides room for alternative fuels that are cheaper to take find their way into the market (again without government involvement).
While the short term make suck for many out there, the long term benefits are exciting to ponder. It demonstrates the elegance and sheer beauty of the free market system.
