Environmental Economics

Yesterday, I posted this.  Last night I got this:

Hi
Tim,

I
read with interest this item on the Environmental Economics website…Would
like to get your thoughts on what would constitute “smart” gas
price coverage…

We
struggle with how best to cover gas prices each and every time prices spike!

Regards, Greg
Agvent, Director
of Planning, CNN

My thoughts on what would constitute 'smart' gas price coverage?

1. Interview me (I didn't send this). 
2. (I sent this) In short, the issue of gas price coverage comes down to one about the
   'need to do something' about gas prices. In many cases, gas price
   fluctuations are the result of natural market forces (it might be
   changes in world supply, or changes in demand).  Because gas consumption
   is viewed as a necessity by many, the immediate reaction to rising
   prices tends to be "do something."  But prices, when adjusting due to
   market forces, create signals for consumers to make better decisions.
   For example, if gas prices are kept artificially low, consumption will
   be kept artificially high.  The problem with doing something about high
   gas prices is that doing something interferes with the signals that
   markets are sending.

   To get more to your question of what constitutes 'smart' coverage,
   smart coverage will recognize the differing roles of market forces and
   policy forces.  Policies to remedy uncomfortable, but natural, market
   conditions represent bad economics.  Policies to remedy market
   misallocations are good economics. Politicians 'doing something' to make
   people complain less, well…

I wonder if I'll hear back?