Cheap gas is not our birthright : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Published Tuesday, September 12, 2000

Cheap gas is not our birthright The world doesn't owe Americans cheap gasoline. That may sound harsh in an affluent and entitled age, where people are taught every problem can be solved by money or counseling.

Actually, we are solving the problem by money. The problem is tight supplies of gasoline, brought on by the booming world economy, rare cohesiveness by OPEC, and tougher environmental rules in the United States. This won't be changed by a mere 800,000 additional barrels of oil on the market. By paying the market price for gas, we ensure that we get the available supplies.

That's the economic reality behind the news stories where politicians call for OPEC to "stabilize" oil prices, as if 50-cent-a-gallon gas in every pol's district is a birthright. As opposed to the days of federal supply allocations and gas lines, today the market is stable. The price mechanism is working just fine.

The "solution" for high gas prices will be equally unsatisfying. If prices remain above $30 a barrel, they will attract producers who couldn't compete if prices were lower. Texas and Oklahoma have thousands of "stripper" wells, which produce less than 10 barrels a day and are expensive to operate. They become increasingly viable with $30 oil. Similarly, non-OPEC oil nations have more incentive to produce, and a flooded market will soon arrive.

This market response - along with getting the federal government out of setting prices and allocating supplies - sank OPEC in the 1980s.

In addition, expensive oil changes consumer behaviors - people drive less, buy more fuel-efficient cars, etc. - and provides incentives for new technologies. Buildings constructed since the early 1970s are very energy efficient, a direct and salutary consequence of that "energy crisis."

OPEC's interest is served only by oil around $25 to $28 a barrel, which is also a good price for American consumers. As usually happens with free economic transactions, the buyer and seller reach a balance that benefits both.

Whether the cartel can act in its interest is another matter, for it is a fractious geopolitical contraption instead of one of those greedy corporations that just wants to sell stuff. OPEC members usually can't even agree among themselves on much more than the four-star restaurants in Vienna.

Back in Washington, higher oil prices release the swamp gas. Alternative fuel boondoggles are vogue again, as is talk of tapping the Strategic Petroleum Reserve - which I thought was to fuel aircraft carriers, not make gas cheaper for the commute from Ballantyne.

One thing the pols won't discuss is reducing taxes, which add between 26 and 53 cents to the price of a gallon of gas. Nor do they want to ease up on environmental rules that have added costs and convoluted the refining and distribution system. Nor is there much push to expand offshore drilling.

Meanwhile, government has blissfully subsidized suburban sprawl for half a century, building interstate highways and beltways while taxing the railroads into critical condition.

Would Americans have "chosen" to live in a far-out suburb and drive a huge SUV if the market really reflected the market, environmental and social costs?

It's hard to say. We're a mobile people in a big country, and choice is a fine thing. But we shouldn't whine about paying the bill.

-- Martin Thompson (, September 12, 2000


This is all well and good. We should pay the market price for oil products. But, why should we when it isn't necessary? We have over 50 billion barrels of untapped reserves on Alaska's North Slope, but the Clinton people have blocked drilling for the past eight years, on the grounds that it might disturb the caribou's habitat. Just because the caribou can survive in cold weather, does it necessarily follow that they would not enjoy a warmer climate as provied by the pipes that would be involved?

-- Billiver (, September 12, 2000.

I can survive in Alaska too, as many people do, but that doesn't mean I, or they, necessarily prefer a cold climate. Chances are many would welcome some warmth.

-- Uncle Fred (, September 12, 2000.

I claim cheap gas as my birthright.

-- Loner (, September 12, 2000.

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