Ending High Gas Prices

Katie Kieffer

5/23/2011 12:01:00 AM - Katie Kieffer

I’m picking out bananas at the grocery store when a young woman slides up beside me and starts adding fruit to her cart while she carries on a loud cell phone conversation with a girlfriend:

"Jess, I think I'll stay over at your place on Wednesday night, because, with gas prices so high, I just can’t justify my commute into work. I might stay over on Thursday too, but I'll let you know." Her dry tone made it sound like she was making a dental appointment, not planning a girls’ night with pjs and cocktails. As she jaunted off toward the broccoli, I thought, "Wow, gas prices really are dominating our lives if adults are planning weekly sleepovers to avoid driving."

So, what can we do to lower gas prices? Lately, liberals have been explaining away high gas prices with two fables. If Michael Moore were a fairy godmother, these are the tales he would tell:

Fable #1: Consumer demand for oil has decreased

Liberals love to say that Americans are losing their desire for an oil-driven lifestyle because they are using less oil. However, U.S. demand is artificially trending downward due to the weak U.S. economy.

Oil consumption began decreasing in 2007 after the financial crisis hit and is projected to continue falling as our economy flounders. On April 5, 2011, AAA’s annual "Your Driving Costs” study revealed that the annual cost of driving and owning a car in the U.S. jumped 3.4 percent. The annual cost of driving and owning a car or SUV is now $8,776 or $11,239 respectively per year. No wonder Americans are driving less.

Producing more windmills and solar panels will not help Americans afford to go out to eat, buy new clothes, go on vacation or commute to work. The President purports to be taking steps to increase oil production. However, are these short-term moves to gear up for his re-election campaign?

Obama's Secretary of Energy, Steven Chu, told The Wall Street Journal: "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” Meanwhile, his Transportation Secretary, Ray LaHood, is pushing a federal tax credit of $7,500 for anyone who purchases an electric car "for as long as it takes to really motivate people to do this."

I’m sure the woman I met in the fruit aisle can’t afford a $32,780 Nissan Leaf if she can’t afford 20 miles worth of extra gas in her weekly commute. Our country just reached her legal debt limit. It makes more sense to make gas affordable than to go into further debt by prematurely relying on "green" technology.

I’d like to see the President take bold steps toward increasing oil production, such as drilling in ANWR and exploring Utah's oil sands. Additionally, I want to see Congress approve courageous spending cuts and pass pro-business tax reforms that encourage job growth and entrepreneurship. Such measures would strengthen the dollar and the overall economy so that Americans can enjoy the oil-driven lifestyle they desire.

Fable #2: Speculation causes gas prices to rise

Recently, President Obama created a special task force to "investigate" possible market manipulation of oil prices. But, blaming Wall Street and capitalists for rising gas prices is a pathetic political move. The New York Times points out: "…most energy experts see no support for that theory. They point out that traditional market forces, like growing demand from emerging countries, and limited growth in oil supplies, can easily account for the increase in prices."

Furthermore, there is significant uncertainty in the market and uncertainty drives speculators to bump up the cost of oil. Global unrest in the oil-rich Middle East and anemic production in stable countries like the U.S. force traders to build a '"fear premium" of $15 to $20 per barrel…into the price of oil to account for further disruptions…,' reports the Associated Press.

Even when the price of oil falls, the price of gas will remain up during a time of market uncertainty. Gas stations only make a few pennies per gallon in profit, so they do not immediately lower their prices when oil prices fall. Gas station owners need to account for lost profits when oil prices skyrocketed and potential profit losses if oil prices swing back up.

Today, the world draws about 35 percent of its oil from North Africa and the Middle East. So, dramatically accelerating U.S. production could help reduce the world’s dependency on oil from high-tension zones, thereby reducing market uncertainty and lowering gas prices.

If we resolutely increase U.S. oil production and get our budget in order, we will stabilize our economy, increase consumer spending and help Americans bounce back to affording a normal, pre-sleepover lifestyle.