April 26, 2006

Gas Prices

We Americans seem to think that it's our right to always have cheap and plentiful gas. You may have noticed, the price is going up. And as always, we don't ask ourselves why, we look for scapegoats and quick fixes. So Econobrowser has a partial answer to why and thus who's to blame. And in this mornings newspaper, there was an excellent letter to the editor about this very subject that gives a pretty good overview:

I began my week by filling my tank with $2.77-per-gallon gas. The radio was tuned to a station that was commenting on the price of gas and quoting prominent Democratic senators who blame President George W. Bush and Republicans for the lack of a national energy policy. I thought perhaps they are right; maybe we don't have a cogent energy policy.

When I read the Post-Dispatch, I saw a picture of a crowd of Woodstock-wannabes celebrating Earth Day. It occurred to me that we do have an energy policy -- a policy influenced by the likes of the "dancers" in the picture.

Since the first Earth Day, with the help of the media, politically driven educational unions, unelected judges and self-serving elected officials, a de facto energy policy has evolved. That policy forbids drilling for oil and natural gas in places where huge amounts are known to exist, erects countless legal barriers to the building of new gasoline refineries and safe, pollution-free nuclear power plants and limits the use of coal, our most abundant resource, for the generation of electricity.

Before complaining about the high price of gasoline, natural gas and electricity, remember how our energy policy was established and by whom.

Tom Mueller | St. Charles

I think together they tell us why - we've decided there are other things about energy more important than it's price. Gas was getting cheaper, so why not worry more about things other than the price. And guess what, we've raised the price by acting on those values. Now that isn't the complete story, because its the increase in world wide demand coupled with the relative decrease in supply that drives the price up.

Would we be happier if the asian economies weren't booming but the price of gas were cheaper?

Posted by Kevin Murphy at April 26, 2006 12:11 PM | Economics