Higher gas prices anyway

Higher gas prices anyway

April 3rd, 2012 in Opinion Times

Gas prices

Photo by Associated Press/Times Free Press.

Amid the angst of rising gasoline prices, at least two things seem clear.

One is that Senate Republicans are keeping billions in annual taxpayer subsidies flowing to Big Oil, never mind the record profits it currently is reaping off rising fuel prices. (The three biggest oil companies, for example, took home $80 billion in profits last year). The Senate proved its allegiance to the oil moguls with another filibuster-proof vote last week to end the $2.4 billion in subsidies to the top five oil companies, mainly because their campaign coffers depend heavily on oil lobbyists' money.

The second apparent feature of the energy-price dynamic is that rising oil and gas production in the United States, which has spurted to record levels under the Obama administration's tenure, has hit such a high level that energy industry analysts now see legitimate long-term prospects of energy independence from imported fossil fuels -- the grail of the "drill baby drill" crowd.

Tea party types, of course, haven't figured out how to reconcile the broader trends, or more specifically, why rising U.S. energy production isn't bringing down the cost of oil and gasoline. Their intellectual dilemma, of course, springs from the fact that they haven't accepted the financial reality that oil is an easily traded international commodity, which means its price is set on the world's commodities markets. So no matter where the oil is produced -- from domestic wells, or in Africa or the Middle East -- customers will pay the international per barrel prices. Raising domestic production won't change that equation.

American consumers are not helping the right-wing's myopia about how to bring down the price at the pump. They have simply begun coping with the market dynamic of rising gasoline prices by logically following market signals -- and consuming less gasoline per mile or per day. As the economy has recovered, they've been trading in their gas guzzlers and buying more fuel efficient vehicles, including hybrids and electric options. Others are rediscovering timeless virtues -- using public transportation more, and riding bicycles or walking more.

With a growing fracking industry and a dawning surfeit of natural gas from shale fields supplementing the oil industry's new drilling, consumers also will begin seeing the rise of a natural gas-or-propane infrastructure for broader vehicle use. That will further relieve demand-side pressure for oil, gasoline and diesel products.

To a point, these converging trends are all good -- so long as environmentally sound and fair-minded regulation over fracking protects vital water supplies from toxic fracking chemicals and hazardous methane contamination of water resources.

The missing focus in this emerging scenario is an emphasis on conservation, alternative vehicles and fair treatment to taxpayers who unreasonably are forced to subsidize Big Oil's mega profits. With barely 5 percent of the world's population and 2 percent of the world's known oil reserves, the United States cannot afford to use more than 20 percent of the world's oil. It will take a far more balanced approach to energy use to achieve a semblance of sustainable, affordable energy use.