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The damage in that case is real though. People and businesses are impacted by price shocks and preventing them is an important thing for the government to do. A
by foota 7y ago
The damage in that case is real though. People and businesses are impacted by price shocks and preventing them is an important thing for the government to do. As for the pricing signal, it's not like the businesses in question would just leave their pipelines broken, they're bleeding money from not being able to sell.
Certainly blocking pricing mechanisms without any additional government source of supply (I'm looking at you, preventing scalping during disasters) is potentially harmful, but I don't see the harm when they government can step in to meet demand.
- valuearb 7y agoThere isn’t any damage to businesses. Higher pricing is how markets work out supplies limits, and prices determine what businesses should do. On the face, lower oil prices is throwing millions out of work and “damaging” energy companies. But in reality it’s a huge boon for the economy. Outside of the energy businesses we are all energy consuming and cheaper energy makes us all more prosperous. The “damage” to energy companies and their employees is the wise reallocation if investment and labor into industries that now have more value and demand. The “damage” can also be temporary, when prices increase investment and jobs will return.
- foota 7y agoJobs aren't just some fungible assets that come back for free when they're lost. A drop in the price of oil can also damage oil's substitutes, especially if the shock is expected to be long term.