Thursday, August 28, 2008

Example #458,098,565 Free Markets Work

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Democrats have been telling us that drilling off the coasts or in ANWR would do nothing and not produce any price reductions for a decade. Here's proof that more supply equals lower prices on another needed commodity, natural gas, which we've been tapping into domestically with fervor of late. Here's the supply news:

Natural-gas prices, which were 50 percent higher in May than they were a year earlier, have dropped so much that early fears of a winter of high prices and short supply are melting away.

A milder summer, strong production of the fuel, a slow economy, and forecasts for a mild early winter have pushed down prices and spurred talk by some analysts of a natural-gas glut.

"You have a combination of two things: some milder-than-normal summer weather and also we're anticipating an 8 percent increase in natural-gas production over last year," said Neil Durbin, a spokesman for Dominion East Gas Co. in Cleveland. "It has had the effect of moderating prices."
Emphasis mine. Now how fast does that take to translate to lower prices? Try less than a day:

Peco Energy Co. said Thursday it will lower its natural gas rate on Sept. 1 because of a projected decrease in gas supply costs in the wholesale market.

The Philadelphia-based electric and gas utility said its gas rate will decrease by 9 cents per hundred cubic feet to $1.59 per hundred cubic feet from $1.68 per hundred cubic feet, which will lower the bills of a typical residential customer by 5.1 percent or $7 per month.
But drilling for oil domestically would have no effect given what we've heard from Speaker Pelosi and other Democrats. It shows they still don't understand free markets.

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