A Chilly, Expensive Winter

Lynne Kiesling

No surprise … the effects of Katrina and Rita on domestic natural gas supplies will lead to higher heating bills this winter, particularly for those who heat with natural gas (and secondarily for those who heat with natural-gas-generated electricity). These shocks exacerbate a five-year trend in increasing natural gas prices, for reasons that we’ve been discussing here at KP since early 2003.

I’ve bought a few extra pairs of Smartwool socks, turned the thermostat to 65 degrees (and to 62 at night), and installed new energy-efficient windows and a door. Brrr. Good thing I like it cold, and wearing sweaters.


5 thoughts on “A Chilly, Expensive Winter

  1. Unfortunately you are joining so many other fellow Americans who never ask why, but just grin and bear the pain – OUCH!

  2. Lynne’s an economist, Jerry, so she knows _exactly_ why the price has gone up: In a market economy, decreased supply leads to increased cost unless demand decreases by a comparable amount. The destruction of the storage and shipping facilities for oil and gas have significantly decreased the supply of these commodities; the demand for gas and heating oil have not decreased by a comparable amount. Hence, the price of these now scarce goods will increase in response.

    I also disagree with you about “most Americans:” These days, most Americans do _not_ appear be willing to “grin and bear the pain,” because they have no more understanding of the Law of Supply and Demand than you appear to. They are instead bitching about how “unfair” prices are, because they have bought into the Marxist economic fallacy that Goods and Services have some innate, absolute, “inherent” fixed value determined by the labor required to produce them. Hence, when prices naturally rise in response to shortages, instead of recognizing the fact that the price increase is a necessary conseequence of the fact that Market economiues obey the Law of Supply and Demand, they jump to the false conclusion that it must be because some greedy capitalist b@$+@rds somewhere must be “conspiring” to “exploit the masses” through “unfair price-gouging” just as you appear to assume.

    The sheer, massive, brute know-nothing ignorance of the “American Public” regarding the Natural Laws of Economics that govern human existence and Human Action, their willingness to uncritically believe the content-free rants of politicians and wacked-out conspiracy theorists, and their insistence on reacting with irrational emotion rather than applying logic and reason to understand the facts of human existence are all simply appalling… >:-(

  3. Lynne’s an economist, Jerry, so she knows _exactly_ why the price has gone up: In a market economy, decreased supply leads to increased cost unless demand decreases by a comparable amount. The destruction of the storage and shipping facilities for oil and gas have significantly decreased the supply of these commodities; the demand for gas and heating oil have not decreased by a comparable amount. Hence, the price of these now scarce goods will increase in response.

    I also disagree with you about “most Americans:” These days, most Americans do _not_ appear be willing to “grin and bear the pain,” because they have no more understanding of the Law of Supply and Demand than you appear to. They are instead bitching about how “unfair” prices are, because they have bought into the Marxist economic fallacy that Goods and Services have some innate, absolute, “inherent” fixed value determined by the labor required to produce them. Hence, when prices naturally rise in response to shortages, instead of recognizing the fact that the price increase is a necessary conseequence of the fact that Market economiues obey the Law of Supply and Demand, they jump to the false conclusion that it must be because some greedy capitalist b@$+@rds somewhere must be “conspiring” to “exploit the masses” through “unfair price-gouging” just as you appear to assume.

    The sheer, massive, brute know-nothing ignorance of the “American Public” regarding the Natural Laws of Economics that govern human existence and Human Action, their willingness to uncritically believe the content-free rants of politicians and wacked-out conspiracy theorists, and their insistence on reacting with irrational emotion rather than applying logic and reason to understand the facts of human existence are all simply appalling… >:-(

  4. Lynne,

    The reduction to 65F during occupied daytime hours will be very easy to get used to. However, try 55F at night (combined with a down comforter and the KS); and, 55F at other times when the house is not occupied. The savings are ~1% per degree F per 8 hr period. In Chicago, the temperature in the house will probably drop to 55F many nights. We’ve been doing this for years and find it very comfortable.

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