Monday, December 22, 2008

Gasoline Prices: Laughing While We Can

When the price of gasoline was over four dollars a gallon no one was smiling. Now, when the price of a gallon of gasoline is under a $1.75, depending upon where you live, people can breathe a bit easier when they fill up their cars. While no one expects gasoline prices to remain this low permanently, it is hard to predict how fast and how high prices will rise. Startlingly enough, the number of miles driven by Americans continues to go down even while the price of gasoline is much lower.

It's the economy stupid. Increasingly larger numbers of people are either getting laid off, or having their hours of work reduced. Most Americans have less money as a result of the decline in whatever investments they had, if they had any. The recession, which is worldwide in nature, has resulted in reduced demand in almost all countries. As a result, OPEC, which has always functioned better when prices were rising as opposed to falling, can't seem to cut oil production quick enough to match falling demand. As a result, many experts are predicting that the price of a gallon of oil may fall as low as $25 a barrel. Oil-producing countries which generated budgets based on $90-$100 a barrel oil are experiencing significant budget shortfalls and cutting production with falling prices only makes the problem worse. It's hard to imagine anyone in America are crying for Venezuela (or is it Argentina?), and certainly not for Iran or any Middle Eastern sandbox that got rich selling oil.

What we cannot afford to do is wait for the price of oil to rise again draining billions of dollars from our economy and going into the coffers of countries that bear us little goodwill. We must proceed with wind driven energy projects, all electrical cars, hybrid cars, and all other possibilities that will decrease our use of gasoline. The omission of ethanol was not an accident because this project has been a farce in terms of not saving energy costs and costing the American public billions of dollars in subsidies to businesses that didn't need such subsidies. Lower gasoline prices combined with the current economic situation will likely produce headwinds for alternative energy projects. However, the next president has his head on straight about this issue, and will not allow the country to be diverted from the all-important task of a comprehensive energy policy. While the president doesn't owe big oil anything, there are too many in Congress who are deep in the pockets of big oil. This is where alternative energy projects are likely to be slowed down. "Drill, drill, drill baby" is a hollow mantra that will do little to solve the long-term energy needs of this country.

1 comment:

Anonymous said...

Now is the time to venture into new technologies and also to convince the auto workers that a new day has dawned. No longer should they be paid for not working, e.g., a plant closes and they are laid off. Maybe the plants won't be closing so often, if new technologies are advanced, so that the consumers can drive efficient, non polluting vechiles.