About those rising gas prices


iconThere has been a lot of whining about rising gas prices lately, but very little has been done to propose realistic solutions to the problem. What it comes down to is simple economics. That is, demand remains high, so there is no economic pressure to lower prices. If you are serious about wanting to pay less at the pump, there are several things that can be done to alleviate the price pressure. (Not that I expect the United States to actually do anything intelligent when it comes to oil.)

Please understand that this list is by no means comprehensive:

  • Make ANWR and other areas currently off limits available for oil drilling. No matter what, something must be done to meet the demand for oil in the short term. The problem is that the enviroweenies don't care about looking for more oil. Even if we found an endless supply that could be gotten easily and cheaply (and without killing any caribou), the hippy types would still insist that we find a car that runs on free love and good karma. ANWR is made up of millions of acres of barren wasteland. Setting up a small drilling operation wouldn't hurt that much, and the heat generated by oil pipelines has actually shown to be good for the wildlife population.

  • Eliminate regulations that make it too expensive to drill for oil domestically. Let's face it, our government doesn't exactly make drilling for oil a cheap process. I'm not saying that we should get rid of all regulation, but the law of diminishing returns means that at some point it is more expensive to keep drilling than it is to empty the well. A lot of oil is left in the ground simply because the cost of drilling it is too high. Lower the cost and you get more oil.

  • Build more refineries. New refineries haven't been built in the United States in nearly 30 years. Even if we had the oil, we couldn't do anything with it without refineries.

  • Settle on one or two blends of gasoline for the whole country. Federal and state regulators pass silly laws that require specialized blends of gasoline for different areas. Since some blends can only be used in some areas and not others storage and distribution becomes a lot more complex. That translates into seasonal shortages and spikes in price.

  • Promote alternative fuel sources so that we are not as dependent on oil. This is about more than electric cars. Since electricity is still derived from fossil fuels, driving electric cars only moves the problem to someone else's neighborhood. Depending on amount of driving done, you might even be using more oil than less. But if we find alternative fuels not just for cars but for our homes, the demand for oil would wane enough to be seen at the pump. For instance, eliminating the de facto ban on nuclear power will reduce our burning of fossil fuels for electricity.

  • Eliminate regional price controls. There is a reason why gas costs more downtown than it does in the suburbs. This is about more than clean air laws. Some cities actually set minimum prices to keep companies like Wal-Mart from coming in and giving local businesses too much competition.
Keep in mind that this doesn't even take into account that nearly every product on the market is in some way derived from petroleum (ie: anything polymer or plastic).

Something else that is interesting is that they keep wondering why people aren't opting for more fuel efficient cars in the light of higher gas prices. Considering that people are buying $40,000 SUVs, it comes as no surprise to me that they aren't worried about an extra $150 a year for gas. Over the life of their car, that's just pennies a day.

But when it comes to gas prices, unless something is done about American supply and demand, expect to continue paying more at the pump.



Comments (4)      top   link me

Comments

As a resident of California I have written my senators about this in the past. You wouldn’t believe the email I received from Boxers website last year that detailed her “nine-point plan to bring gas prices back into line.” It included; “tapping the strategic petroleum reserve, which
by law is intended to be used in situations just like this one”. What a joke.
Although I realize it will most likely do no good writing to the supreme lefties like Boxer and Feinstein, it really is nice to annoy them as often as I can. With your permission I would like to paraphrase your bullet points in my next submission to them.

Posted by: Shane at March 8, 2005 11:47 AM

Submit away.

Posted by: Ravenwood at March 8, 2005 4:32 PM

You're so right about this, especially the refineries - they're the 'bottleneck' in the supply chain here in California. We could be up to our hips in crude oil, but still waiting for the refinery....

Posted by: Mad Mikey at March 9, 2005 9:40 AM

Add the Gulf of Mexico and offshore in Southern California to places we should be drilling and pumping from.

I want the world's biggest offshore rig to be parked within sight of Streisand's house in Malibu.

Posted by: Heartless Libertarian at March 9, 2005 2:03 PM

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