Oh No! Gas Prices Are Falling!
Every time the price of oil drops, the demand for that same product increases and the demand for alternate fuels, decreases. Why are gas prices falling?
China Daily reported that “oil dropped more than 6 percent to below $88.00 a barrel on Monday as a global market rout churned concerns that faltering fuel demand could slow further.”
In other words, we aren’t buying enough, so it’s time to lower the price. But can anyone other than the people vested in that market honestly say that we don’t use enough oil?
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In his new book “Hot, Flat, and Crowded”, Thomas L. Friedman writes “When I asked Rick Wagoner, the chairman and CEO of General Motors, why his company didn’t make more fuel-efficient cars, he gave me the standard answer: that GM has never succeeded in telling Americans what cars they should buy.” Thomas goes on to say , “But what the Detroit executives never tell you is that one big reason the public wanted SUVs and Hummers all those years was that Detroit and the oil industry constantly lobbied Congress against raising gasoline taxes, which would have shaped public demand for something different.”
European countries have been imposing high gasoline taxes for years, and when I was serving in Germany in the early 90’s, a gallon of gas was $6.84 a gallon, and that was 20 years ago! The result is that European countries have demanded smaller and smaller cars.
As of this writing, Gasoline in Denmark is about $9.00 a gallon, compared to $3.65 in the United States. (Up from $2.50 a year ago and down from $4.50 two months ago.) It seems like $9.00 a gallon gas in Denmark would decimate it’s economy right? Since 1981, there economy has grown 70 percent while energy consumption has been flat. In 1973, Denmark got 99 percent of it’s energy from the Middle East. Today, it gets zero.
We’ve become spoiled in the United States. We have grown up thinking that the oil that runs everything from our cars to our industrial complex, is cheap, inexhaustible and politically neutral. But we have come to an age where we realize that oil is in short supply, expensive, environmentally damaging and a political nightmare.
So with these realizations, instead of following the success of countries like Denmark, Brazil and Germany, we continue to lower the price, to fuel the demand, to use more of what we are running out of.
The Republican saying “Drill more, use less” doesn’t work. If we want more of the same Environmental devastation, financial crisis, repeated bailouts, and political situations like wars, terrorism and starvation, then all we have to do is…nothing.
I say it’s time to raise the price of Gasoline in this country. It’s time to drive this economy toward a sustainable energy program that will benefit our economy, our lives and our environment.
Photo courtesy of WiseOwl via Creative Commons License
“We’ve become spoiled in the United States. We have grown up thinking that the oil that runs everything from our cars to our industrial complex, is cheap, inexhaustible and politically neutral.”
Actually, Europe has made oil artificially expensive — by adding on taxes. Nothing is inexhaustible — and when we run out in about 30 years, we’ll stop using it. As to its political neutrality — other natural resources are politically neutral, it is only statists and environmentalists who make using oil a political issue.
I too lived in Europe and to compare them to us is not useful. We live in a large expansive country that has built an infrastructure with homes built nowhere near jobs or groceries. Suburbs my friends. Europe doesn’t have many subs and what they do have isn’t like ours. I’d love to see a major infrastructure change here but it’s not going to happen.
I do agree we need many sources of fuel but at this time there isn’t one, except perhaps nuclear that will work on a large scale. So we are for the time being stuck with oil.
The current financial crisis has nothing to do with oil, it has to do with Democrats and some Republicans in congress that fought to give loans to those that did not qualify through regulations and laws. The free market was bypassed for political correctness and votes while the regulations there were in place were not enforced. Both political sides failed us there.
The question is do we rely on other countries to supply us and create a greater dependency or do we produced it ourselves at least until we can generate some other form of fuel?
“But part of that stifling comes from keeping gas prices at a false low level.”
I question this premise. I would argue that it is actually European governments who are keeping gas prices at a falsely inflated level by imposing such high taxes.
“since 1981 there (sic) economy has grown 70%”
…and ours (USA) has grown 120% over the same period, so maybe you shouldn’t dismiss the cost of those taxes so easily. That’s 2.6 TRILLION dollars just in 2007.
I understand you’re customer base. The reason they shop there is to save money. I have my own opinions on what WalMart is doing to society, but that’s another story.
This is exactly like the gas situation… as long as people can do more with less on an individual level, they are less likely to worry about the “bigger picture”.
We’re spoiled because the amount we pay for something is what it’s worth? Well, we don’t really - gas is taxed at a higher rate than most products in this country - but it’s a lot closer than what you’re proposing if you want to emulate Europe.
I guess you’re right. Taxes are a great way to make people buy less of something! We should have food taxes that double the price of food - that will get rid of a lot of fat people. There should be a large tax for car stereos that are too loud. There should be a nuisance tax for people who ride bicycles on busy roads when other paths exist - double if they’re wearing spandex. Hot tubs should be taxed because they waste water - heck, regular tubs and showers should be taxed because they also waste water. You did say you want to emulate Europe, right? Fewer showers would be a huge leap towards that goal.
Finally, we should have blog taxes. That will get rid of all the silly blog postings, which, I think we can all agree, take up far too much of this nation’s precious time.
Well, that’s about the dumbest thing I’ve read so far this month. Let’s have our government shape our economy like the Europeans do. That’s worked so well for them (even given the small amount of GDP they have to spend for defense, because we spend it for them). RAise prices on gasoline and give the difference to the government, because they have been so effective so far in how they spend our money. To misquote P.J. O’Rourke, “Giving money and power to government is like giving whiskey and car keys to teen age boys.”
Adam,
I am with Nick in agreeing with a lot of what you say in your article but disagreeing about how to get there. I have to wonder about your intent when you state in the comments that:
“…, but I bet they are still wasting money by filling their carts with Soda, Captain Crunch, 9.00 dvd’s, and 5 gallon, buy one get one free, jars of pickles.
We are not hurting as much as people say we are.”
Please forgive me if I am incorrect in thinking this but it seems like you have a perception that we have too much and we need to suffer. Thus burning less gas by adopting better technology is not attractive because it does not hurt enough.
Many of us believe that there is a better way. We should fund science aimed at developing new or improved energy sources. We should come up with effective ways to save energy today. It is the right thing to do.
I welcome you as an ally in the attempt to end our dependence on oil. I am not opposed to the discussion of raising the taxes on the price of gasoline, specially if any increase in tax revenue is then invested into research on alternative energy.
Thank you very much for sharing your thoughts. They are well formed and make for great discussion.
“We have grown up thinking that the oil that runs everything from our cars to our industrial complex, is cheap, inexhaustible and politically neutral. ”
Speak for yourself. Were you alive during or have you ever read about the OPEC oil embargo? And hey, people think oil is cheap… because it is. Adding a government tax to make it expensive is certainly a way to distort a market and alter behavior, but it doesn’t change the fact that the underlying resource is very cheap–the reason you want the tax in the first place.
“The Republican saying “Drill more, use less” doesn’t work. If we want more of the same Environmental devastation, financial crisis, repeated bailouts, and political situations like wars, terrorism and starvation, then all we have to do is…nothing.”
Oh please. This is so mixed up and confused it’s hard to know where to start. If you are interested in working to achieve a better energy situation, put away your incoherent partisan nonsense. And anyway Republicans are saying ‘all of the above’, not just drill more use less.
My opinion is that we want to try to transition to an electricity-based economy, with nuclear providing base coverage. Solar and wind are great when we can get them but let’s not pretend they are efficient, inexpensive, or environmentally neutral. Remember, Russia’s BN-600 FBR has generated more power since 1980 than all the solar power in the world combined–ever.
Hopefully we will have some neat nano-bio solutions in the future, too. All of this will take time, although the nuclear piece can be rapidly deployed with the right political will. But look, it will be good to drill domestically for jobs, for the current account deficit, and to add downward pressure to the price of oil, indirectly weakening nasties like Russia, Venezuela, and Iran.
Two simple first steps:
1) Flex fuel mandates.
2) Facilitation (legal, insurance, zoning, litigation reform) of domestic nuclear power expansion.
Oil is more expensive in Europe because of taxes not an intrinsic property of oil itself. Oil is, relatively speaking, a cheap and efficient energy source. Doesn’t it make sense to use it? Why buy more expensive energy when we don’t have to? We don’t do that for anything else. Usually higher prices are justified by higher utility. You can make the externality argument, but most of those fall pretty flat if you don’t buy into the global warming hype, and even if you do, paying for mitigation proves to be cheaper than the alternative sources of energy. Enjoy cheap energy - it heats and cools our homes, refrigerates our food, allows us to manufacture great things like pharmaceuticals and iPods, it gets us to work & play… Lighten up!