A Battle of Wits with an Unarmed Man
Driving in to work this morning, I caught part of a discussion on The Diane Rehm Show between David Kreutzer, Senior Policy Analyst in Energy Economics and Climate Change at The Heritage Foundation and Peter Gosselin, national economics reporter for the Los Angeles Times about the recent spike in oil prices.
Kreutzer asserted that drilling in the Arctic National Wildlife refuge and offshore would yield somewhere in the neighborhood of 4 million barrels a day and, by itself, lead to a 25 percent reduction in the price of gasoline at the pump. Gosselin said that the price impact would be negligible because it would be such a small amount of overall production. Rehm chimed in saying that it would be “literally, a drop in the bucket” and got Gosselin to agree to that assessment.
Kreutzer countered that, no, the way the supply curve works is that a relatively small change in either supply or demand can have a drastic impact on prices once reserve capacity is used up because of elasticity. Gosselin responded that it didn’t sound right to him.
Why are these people debating as equals on a national radio program?
Both are biased observers, to be sure, but that’s the nature of these shows. But Kreutzer is a PhD economist (George Mason, 1984) whereas Gosselin somehow got an MBA (Columbia) despite not understanding that prices respond to changes in supply and demand in a curvilinear rather than an arithmetic fashion.
Couldn’t Rehm’s producers find someone who could debate economics from a leftist perspective but actually understood economics? Wasn’t Brad DeLong available? Or Duncan Black? Or, you know, pretty much any economist employed by a university?