9.05.2008

Not Connecting the Dots on High Gas Prices

I keep reading from my elected candidates' newsletters, as they've gone travelling around Texas, how our number one concern here is the cost of gas.

They had to drive around the state/district to figure that one out?

Anyway. They also all say that to fix it, we have to make ourselves less dependent on foreign oil by 1) drilling drilling drilling here at home to eek out every drop we have, and 2) harnessing more solar, nuclear and wind energy.

Taking the second prong first, the sustainable (at least in the case of solar and wind) resources we have don't fuel our cars. They fuel our utilities, which currently are mostly powered by coal, then by nuclear and water resources. So, by switching to these sustainable resources (which I'm not arguing would be a great idea for climate issues) would make us ... less dependent on our own coal, nuclear and water resources, but would have zero impact on gas prices.

Gas prices are not simply driven by the supply of gas. There are two parts to that equation - supply, and demand. I learned this in high school economics (and a few college and graduate courses after that) (oops there I go - elitist with my elitist education and all, because education is just so shamefully elitist ... but I digress). Plenty of credible research out there (including from the current administration) claims that trying to lower gas prices by increasing our domestic supply will have little to no long-term impact on the price of gas. OPEC still controls the lion's share of the supply out there, and if we step up production, they withhold, and the price stays where it is.

However, we do have some control on our demand. We can push for more fuel-efficient cars. We have the technology, there's no change to our fuel distribution infrastructure needed (like hydrogen cells or all-electric cars require). It's right here, available now. We could increase public mass transportation infrastructure to give people yet another choice besides their gas-dependent cars for getting from point A to point B, making the supply-demand curve even more elastic as consumers have more choice and control over making a market-based decision for how much they're willing to spend on gas for the convenience of riding in their own car.

The little elasticity that we do have in the supply-demand curve now, combined with a slight strengthening of the dollar against foreign currencies (as we do buy most of our oil from abroad) is what has helped prices come down in the last month. Not increased production.

Gas prices are an economic phenomenon, with several realistic options available. Personally, I feel the politicians of either party who neglect to address the entire equation of supply and demand and instead only jump up and down about increasing drilling domestically are a disgrace, serving the profits of american oil companies by continuing to shout out a useless non-solution and distract their constituents from what might actually be effective.

Requiring higher fuel efficiency from cars means I'm immediately spending less on gas because I need less, plus it decreases demand overall and has a macroeconomic effect of a downward shift on the price - two downward pressures on my actual gas expenditures. And if I'm really fed up with the gas price today - I can take the local commuter rail. Take that, Saudi Arabia!

Why oh why aren't those conservative, fiscal economic geniuses in the GOP leaping onto this?

My own Congressional Rep. is John Carter. I subscribe to his newsletter, the Carter Courier, and I'm starting to feel a little sorry for him. He's so out of touch, and, like someone who is out of touch, he's oblivious to how out of touch he is. So it's a little sad to read his newsletter because it's like watching someone running full-on towards a big brick wall and there's nothing you can do to get them to see the wall ahead. If he gets challenged by any sort of qualified Democrat in the next election, this will be his last term, and I almost feel a little badly for the man. I know his heart's in the right place, and I believe he's faithfully served the best as he knew how. I wish him well, but he won't be coming back to office again.

3 comments:

TBnJ said...

I don't subscribe to Carter's newsletter: He signed me up for it when I sent an e-mail to complain about one of the many things he's done wrong. Each month I dutifully hit the delete key when it arrives. I just don't want to hear more about his errors that he sees as victories.

TBnJ said...

ps-- Carter won re-election the last time around pretty soundly. It wasn't even close.

wcnews said...

I agree with your comments on energy, it's not one thing, it's everything.

As far as JC is concerned his stance has more to do with his millions in Exxon-Mobil stock than anything else.

As far as what's in his heart....