01-11-10 by dugan
Why be obsessed with the price of gasoline? Easy. High energy prices, including prices at the pump, will slow and even reverse economic recovery. Every 10-cent a gallon increase in the price of a gallon of gas means another $1 billion less for consumers to spend on anything else. As the Associated Press reports today, gasoline prices have shot up 20% in just the last month, even though unemployment is stuck at over 10%. Consumers are spending $50 a month more on gasoline than they were a year ago, when prices bottomed out.
Alaska, California and Hawaii already paying more than $3.00 for regular gasoline, according to AAA, with New York a few pennies away. The speed of the recent increase, if it continues into spring, would put about half the states over $3.00 a gallon by April. Even more disturbing, the diesel fuel that runs trucks and trains is spiking well above gasoline, costing 20 cents to 25 cents a gallon extra in many states. That translates to higher prices in stores and supermarkets.
The short-term solution is to get the cost of oil, which has nearly tripled in the last year, under control and aligned with supply and demand, not with speculative bets on more demand next year, or with daily fluctuations in the value of the dollar, or a profit grab by the giant investment banks that taxpayers bailed out. That’s a matter of proposed regulation, still being lobbied to pieces in Washington.
Cutting dependence on oil and other fossil fuels is the obvious long-term cure, but here’s a position paper by the Western States Petroleum Association that shows why it’ll be hard.
The group’s main complaint is about California’s push to reduce carbon emissions. Its conclusion reads like a polite ransom note: Ease up on the oil industry, or you won’t see your beloved gas pump again:
One of California’s main objectives with these climate change policies
is to reduce petroleum consumption. Our industry is understandably
cautious about investing in needed improvements to the region’s
petroleum infrastructure given the state’s focus on petroleum demand
reduction.Without additional refinery, pipeline and waterfront crude oil
import capacity, the West Coast will become more heavily dependent on
foreign crude oil, and imported gasoline, diesel fuel and jet fuel.
That’s not good news for our members nor does it bode well for
businesses and consumers.
Of course, the oil industry doesn’t mention that the major climate change bills would cut oil consumption in part by using the money from carbon taxes or caps to subsidize green energy and greener transportation. So when you’re driving your ultra-fuel-efficient or plug-in hybrid vehicle, bought with the help of a tax credit/incentive payment, you’ll be sailing past the gas station anyway.
The tough part is getting from now to then without letting energy costs trash the economy first. Part of the solution is learning to ignore the oil and utility company warnings of doom.