ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
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Great cartoon. I thought about oil econ 101 when I saw it.
But if there were cheaper alternatives to personal transportation that didn't use oil, then that would spread to developing countries too. We would still buy oil from the cheapest sources, but the world would buy less oil.
This is why calls to research make sense.
The cartoon only explains why it is bad to subsidize the purchases of more expensive half-solutions.
Conservation and substitution in the developed world would reduce demand and result in a lower price of oil overall. That would reduce the amount of money going to countries who citizens and bureaucrats might illicitly funnel money to terrorists.
Check out Scott Adams' somewhat related blog posting.
As long as the supply of oil is upward sloping, conservation will reduce the amount of oil consumed. Conservation shifts the demand curve for oil leftward, reducing the equilibrium quantity - not as much as the the amount "conserved", but some nevertheless.