Sometimes you just want to throw up your hands. Interviewing another big oil exec this morning, Katie Couric's proposed solution to high gas prices was to repeal the laws of supply and demand . . . just a little bit.
Whereas Matt Lauer took a while in his interview of another oil exec to get around to his price-cutting point, Katie wasted no time. Interviewing Shell Oil President John Hofmeister, Katie's opening salvo was
"I am just wondering, you and many other oil companies are posting record high profits, of course. And while the average consumer is hurting. I am wondering, Mr. Hofmeister, would it help the long term reputation and value of your company and shareholders if you could feel the pain that consumers were feeling and decrease the wholesale value of gasoline? Is that something you would ever consider?"
In responding, Hofmeister made the obvious point that had somehow escaped Katie: "Lowering the wholesale price would really put a run on our gas and we would run out. The market sets the prices. We follow the markets."
What's particularly remarkable about Couric's inability to consider the market implications of her suggestion is that, no more than a minute before making it, Katie herself in introducing the segment had reported that:
"Oil supply is having a tough time keeping up with demand. The world produces 85 million barrels of oil a day but consume 84 million barrels a day."
Katie, don't you get it? Demand is 84 million barrels AT CURRENT PRICES. Demand is e-l-a-s-t-i-c. If you lower prices, you increase demand. If there's only a one million barrel supply cushion, any significant price decrease will inevitably result in shortages! Ar-g-g-g-h!!
Hofmeister later mentioned that "We have six million people a day who come through our stations" and claimed "we care about every one of them." Katie jumped at the opening:
"If you care about people, you know that consumers are really struggling with this. [Is] there is no middle ground to give them a rebate to help them out while enjoying profits to reinvest for future earnings?"
Again, Hofmeister had to bring Katie back to economic reality. "I wish there was. In a commodity marketplace where supply and demands prevail, even public policy could not help. The windfall profits tax in the 1980s was a failure and set up problems today. Public policy is important to the oil industry especially in terms of getting more supply. If we can bring more supply to the American people, that will go a long way to meeting the demand."
Katie: "How will you do that?"
Hofmeister: "We would like to see the Congress give us permission to explore on the outer continental shelf."
Couric: "Environmentalists have a big issue with that."
Hofmeister: "And we will do whatever public policy says. But if we can't access the 100 billion barrels out there, it will lead to a tougher supply situation."
Katie got in one last shot: "In closing, this Memorial Day weekend when people are filling up their gas tanks and cursing you out, what would you say to them?"
Hofmeister: "Drive slower. You will get more mileage."
That wasn't sufficiently remorseful for Katie: "You must have something else to say."
Hofmeister: "We don't like the high prices anymore than consumers do."
Katie, next time you do a segment on the latest diet fad [and last night on the supermarket checkout line I saw - no joke - a cover story in Woman's Weekly Magazine for . . . The Da Vinci Code Diet!], why not suggest to the diet guru that the laws of gravity be ever-so-slightly altered to give the obese a break? It would make as much sense as your call for a suspension of the laws of supply and demand!