Imagine my surprise, as a slightly befuddled intern trapped in the whirlwind of energy-policy research, when I found definitive and rather humorous proof that several decades of established economic theory contradicted core liberal doctrine.
It all began after weeks of debate over whether Congress should lift its bans on drilling for oil offshore and in the Alaskan National Wildlife Refuge (ANWR). Sen. Barack Obama and his liberal allies on Capitol Hill proclaimed the hallowed truism that “we can’t drill our way out of higher gas prices.”
But after Martin Feldstein, Harvard economics professor and a Reagan administration chairman of the Council of Economic Advisers, pointed out the serious flaws in this notion in a Wall Street Journal oped, my immediate boss (Newt Gingrich’s research director) asked me to dig up some more research on the matter.
The professor’s basic position came from simple economic theory: If you increase supply, you will lower prices, or at least decrease the rate of price inflation. But just as importantly, Feldstein claimed that even future increases in supply can have an immediate impact on oil prices, because buyers and sellers take expected changes into account when making decisions.
In my research, I happened upon study entitled “The Effect of Opening Up ANWR to Drilling on the Current Price of Oil.” The study’s conclusion was a stunning vindication of Feldstein’s position:
If an amount of newly discovered oil is significant enough to reduce prices in the future . . . [this indirectly] reduces the current price of oil just as if there were a reduction in the marginal costs of extracting oil now.
I immediately fired off an e-mail to the study’s lead author, Morris Coats, requesting more information on the subject.
I was curious why the study appeared on a website for unpublished work, and I soon found the answer: It was rejected by The Energy Journal, a prestigious academic journal of resource economics.
But why? Was the analysis flawed? Was this censorship another example of academia’s leftward slant?
No. When Dr. Coats sent me his rejection letter, part of it read:
I regret to say that we will not be able to publish this work. Basically, your main result (the present impact of an anticipated future supply change) is already known to economists (although perhaps not to the Democratic Policy Committee) . . . It is our policy to publish only original research that adds significantly to the body of received knowledge regarding energy markets and policy.
The letter is a spectacular indictment of the anti-drilling position. It reveals the stunning chasm between the ideas economists have taken for granted for decades and what liberal politicians view as established fact. If Democratic politicians actually believe that drilling won’t reduce prices immediately, they are stuck in a mentality that expired as long ago as the 1930s.
– Joel Alicea, a junior at Princeton University, is from El Paso, Texas. He is currently interning for Newt Gingrich at the American Enterprise Institute in Washington, D.C.