Big news: Markets work

I was kind of surprised yesterday when John McCain's statement about oil prices -- that President Bush's lifting of the offshore drilling ban had resulted in a $10-a-barrel wholesale decrease -- became the lede of the Associated Press story from Wilkes-Barre. Rush Limbaugh has been saying this for several days, so it didn't strike me as big news.

When I stopped for gas en route to Wilkes-Barre yesterday, the price was $3.89 a gallon -- below the $4-a-gallon price we saw for several weeks -- and so, contrary to Nancy Pelosi, we didn't have to wait years and years for the impact. The mere expectation that the U.S. might allow more drilling was enough to cause speculators to go short.

Actually, Crazy Cousin John understated the impact. As Ed Morrisey notes, oil has now dropped $20 a barrel since Bush lifted the offshore ban. The White House modestly declined to take full credit:

Presidential spokeswoman Dana Perino said the price drop also could reflect diminished demand.
"I don't know if we fully deserve the credit," Perino said.
"We don't predict what happens in the market," she said. "We can't really tell. Certainly, taking that action would send a signal that at least the executive branch is serious about moving forward and increasing the supply we have in America."

What amazes me is how many people -- from Nancy Pelosi to Associated Press reporters -- seem so shocked about the fact that markets work. Don't these people know anything about economics?