Do Senators Understand Markets?

Maria Cantwell, D-OR, one of the Senatorial Interrogators during Big Oil's recent appearance on the Hill, demanded to know what the price of the next marginal produced barrel of oil "should be". Exxon's CEO Rex Tillerson replied between $60-$70. Ms. Cantwell deduced that given the price of oil is around $100 per barrel, this disparity demonstrated the immoral gouging by "speculators". We presume that the good senator can determine who is a "legitmate" bidder for that barrel of oil and who is not.

Perhaps one day Ms. Cantwell can ask Steve Jobs what price the next marginal produced 16 GB IPad "should be". It could be as low as $260, but it actually retails at $499. This is nearly a 100% markup.

Mark Perry has made a similar arguement, summarized at his excellent blog Carpe Diem.