Rising gas prices defy easy answers

Staff Writer
Woodford Times

There’s bad news when it comes to gasoline prices, and there’s even worse news.

The bad news is that the pain at the pump is probably going to get a lot worse before it gets better. Gas prices have risen nearly 40 cents in less than two weeks in some places, and the national average of $3.72 is the highest ever recorded at the end of February. Four-dollar gas is almost a certainty this year (it’s already here in some states), and many forecasters say $5 or higher is not out of the question.

The worse news is that there’s not much any of us can do about it, at least not in the short run - except use less.

There’s no product whose price affects us, or annoys us, more than gasoline. The steady rise in gas prices since the first of the year has siphoned millions of dollars out of the wallets of Americans and threatens to clip the wings of the fledgling economic recovery. And the rising prices are displayed for us every day in 3-foot-tall letters.

Anyone who claims to fully understand what’s behind gasoline prices is talking out of his hat. Like the daily gyrations of the stock market, the short-term movements of the oil and gas markets defy easy answers. What’s behind the price spike? Simple supply and demand sure doesn’t explain it - there’s been no major disruption in world oil supplies and U.S. gas consumption is down to the point that refiners have enough capacity to take imported oil and process it into gasoline for export. So what’s behind the price spike? Is it fear of instability in the Middle East driving up crude oil prices? Certainly. Anticipation that demand will rise as the economy rebounds? Probably. Speculators betting on future prices? That’s possible. Refineries taken offline in the United States? Could be.

It’s a frustrating, complex problem, and, contrary to what some politicians say, there’s no simple response short of heavy-handed and counterproductive government intervention. We don’t need a government probe - all the investigations launched by politicians over the years haven’t found conspiracy, collusion or price-fixing behind gasoline prices. Suspending the gas tax would cut prices, but kill every road project in America. Releasing oil from the Strategic Petroleum Reserve should be reserved for true shortages.

And we can’t drill our way to significantly lower gasoline prices. The United States imports 60 percent of its oil, and if we drilled everywhere possible - offshore, in the Arctic, in your front yard - we might reduce that to 50 percent. Even then, we’d still be importing half our oil at world market prices that we can’t control, and we don’t think domestic oil producers would be offering deep discounts off the market price out of the goodness of their hearts. Increasing domestic oil production and building the Keystone pipeline would help in terms of energy security and our balance of trade, but it won’t bring a return to 1992 prices.

So there’s the bad news and the even worse news. But there is good news: We each have the power to counter rising gasoline prices. The methods we have are the familiar ones we’ve heard about for years, the ones we’ve always had at our disposal - cutting back on our driving, carpooling and combining trips whenever possible, buying a more fuel-efficient vehicle. Americans have made great strides in conservation in recent years, and while it may not move the unfathomable markets or make oil company executives and Middle East potentates squirm, it will keep more money in our wallets. And that’s the point, isn’t it?

— GateHouse News Service