Just curious (this is not a rhetorical question, have never stepped inside a public school in USA except for an occasional friend's-kid-has-recital thinggy).

'Cause I'm curious to know what are the chances that US voters realize that cutting gas taxes by 15 cents will NOT lower price at pumps by 15 cents (they'll be darned lucky if it lowers it by 7 cents!).

But to know that one needs to know Demand-supply-theory 101! Sounds like two politicians are betting that noone gets to learn that unless they actually take an econ course in college!

It's kind of seeming like oil prices have absolutely nothing to do with supply and demand. I heard a really neat radio interview with an oil industry insider the other morning and it sounded like there is an overwhelming surplus of oil available. It's the speculators that are driving the prices up mostly based on psychological factors.

"'Cause I'm curious to know what are the chances that US voters realize that cutting gas taxes by 15 cents will NOT lower price at pumps by 15 cents (they'll be darned lucky if it lowers it by 7 cents!)."

Hell, we will be doing good if it lowers the price by one cent. Most likely it will go up so the oil compaies will make even more money.

It's possible that some public schools offer an elective economics course. But economics really isn't a part of a public school curricula. (Or at least it wasn't in mine, and my highschool was one of the highest ranked public schools in the country) It's touched upon a little in politics classes, but not to any real extent. The students essentially learn the buzz words and that's it....

Hi doll. My son graduated last year from an average high school in Southern California and they did not offer an economics class. I taught him to do the basics like balance a checkbook, etc.

When I graduated in 198mumble from high school, "Economics" was a requirement for graduation, the content of which escapes me, now. Kind of like algebra.

I never had economics in school...my grandfather taught me all of that stuff.

What I'm more curious about is why no-one has come up with the most obvious solutions to 2 of the biggest problems:

1) Have the oil companies pay the stupid gas tax instead of the consumer - it's not like they don't have enough money to do so considering their record profits.

2) Have the mortgage lenders freeze the homeowner's mortgage payment at their pre-adjustment (pre-forclosure) rate for 1-5 years, you know, the one that they weren't having any trouble paying before the interest rate adjustment.

Why not?????

Thanks, PhysicsGirl, Mermaid...okay, so its as I suspected, they are betting (alas, probably rightly) that a chunk of voters WILL assume that 15 cent tax reduction translates to 15 cent drop in price!

Onio -- it will reduce prices by a few cents, all other things remaining constant. But the bulk of the benefits will be pocketed by oil companies.

If anyone anywhere in the government had a pair of balls, that's what we'd be getting. But Dubya doesn't want to "penalize" the oil companies.

Worst. President. Ever.

Alas, it DOES have much to do with demand and supply.....and one reason why high prices are here to stay is that there's a steadily rising demand from the growing mega-economies in India and China.

There's no conflict between restricted supply and having a 'reserve' (I guess that's what he meant by 'surplus'!). If suppliers think prices will be even higher tomorrow, then they'll hold on to a big chunk of reserves to sell tomorrow.

And its probably a good time to play the futures market in oil! If I had either the cash or the time, I may have wanted to do the same thing. The underlying 'psychological factors' are common sense, demand from India and China ain't going anywhere, that'll just keep growing. So barring finding some amazingly rich oil reserves (what's there in ANWR really isn't much), the common sense bet is that the price of oil will keep going up.

Basically, the first country that finds a VIABLE (read -- not corn ethanol) alternative to the stuff is going to be the next economic superpower.

Kids in Texas get one semester of economics, usually in the 11th or 12th grade, along with one semester of U.S. government. Is it enough? Not really, but there's not a lot of room for anything else.

1) Have the oil companies pay the stupid gas tax instead of the consumer - it's not like they don't have enough money to do so considering their record profits.

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You CAN'T 'make' a company, any company, pay all the taxes, a part of it will always get passed off to the consumers in form of higher prices. After all, the government can't possibly micro-monitor what fraction of a price rise at the tank is coming from which reason. As such, you don't know right now exactly what fraction of the 15 cents the companies ARE paying at the mo'.

2) Have the mortgage lenders freeze the homeowner's mortgage payment at their pre-adjustment (pre-forclosure) rate for 1-5 years, you know, the one that they weren't having any trouble paying before the interest rate adjustment.

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Except that the mortgage lenders probably gave those initial rates at almost no profit at all on the assumption that they'd make their profits as the rates rose. So basically if they get frozen now, its short-term relief for homeowners, but quitea few more lenders will go bankrupt. And in future no lender would EVER offer those ARM deals, and it'd be back to the old-fashioned 15yr and 30yr stuff (not that it would be a bad thing, IMO, but everyone'd be wringing hands because so many consumers couldn't realize the 'american dream' of "home ownership RIGHT NOW.").

Happy -

1.) They do. The oil companies just pass the cost through to you.

2.) Everyone could just fake their own foreclosure in order to keep the lower interest rate despite the fact they signed a contract agreeing to the adustable rate.

(My opinion on a solution to #2 would be to better educate the citizens of this country on the basics of personal finance. Maybe they should start teaching that in elementary school?)

1) They know which part of the price is the federal and state taxes, don't they? So make the oil companies pay that...I don't see what the big deal would be on calculating that.

2) The mortgage lenders aren't making any money on the sale (or lack thereof) of foreclosed homes, so what difference does it make? Either way, they aren't making any money now, but may have a chance to recoup in the future when housing prices go back up. Roll them all over into 30 year mortgages for all I care at a regular 30 year fixed rate mortgage rate, they still will get their money as long as the homeowner can afford to stay in the house and pay for it.

And, if they make it illegal to give loans to people who can't pay them back, then everything would be right with the home-ownership world. (ie. Only people who can afford to own houses will...and they'll own houses that are within their financial means, not these friggin' McMansions that nobody really needs, but everybody has because it's just a status symbol.)

Konark -

I'm certainly no expert on this but 10 seconds (literally) worth of research led me to this article: <link>

Pretty interesting.

1) They know which part of the price is the federal and state taxes, don't they? So make the oil companies pay that...I don't see what the big deal would be on calculating that.

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Actually, no they DON'T know that. The government collects x cents on every gallon of gasoline sold directly from the company. But of the price that's being charged at the pump, the government is not able to calculate what fraction is part of company's operative cost, labor cost, investment in infrastructure, interest on loans, and 'passing on' of taxes. Especially since the fraction of taxes that get passed on are driven by a myriad of seasonal and local factors that drive the sensitivity ('elasticity') of demand. So the fraction that gets passed on in Dallas, for e.g., may not be the same fraction that gets passed on in smalltown Oregon, the fraction that gets passed on during holidays is not what gets passed on at other times etc etc.

And, if they make it illegal to give loans to people who can't pay them back, then everything would be right

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Very very VERY slippery slope -- how on earth can a company really KNOW a person's future earning potential etc etc ? And a company becomes wide-open to discrimination lawsuits if they start trying to guesstimate that kind of stuff -- what, for example, happens if they decide that people of such and such race-ethnicty get laid off more, so we won't make loans to them ?

This is REALLY the kind of thing the consumers are supposed to be able to figure out themselves. But alas, it requires that the consumers be able to do SOME math, and not be completely shortsighted and think just a few years down the road!

What we need is a nationwide push to teach people 'basic math and economics for day-to-day living' type stuff, as well as start a national conversation on benefits of delaying consumption-gratification rather than the whole 'enjoy it all NOW' mentality.