Gas pricing not a simple issue
“Gas estimated to peak at $4.15” the headline reads. No, it is not 2012. It from a June 12, 2008 newspaper.
In May 2008, average gas prices in the United States hovered around and in some places passed $4 a gallon, shattering records. Nothing new to American consumers were the records that broke one after another, with prices eventually falling and then inching toward the $4 mark again in 2011.
Back then I stopped doing any driving I didn’t have to do and have continued driving as little as possible. My frequent trips to the Opelika-Auburn area became rare.
Americans are driving less and using less gasoline, but the price is not falling. Yet we still get hit in the pocketbook in the things we buy, particularly groceries. The powers that be say when gas hits $4 a gallon it starts hurting the economy. It’s already hurt my personal economy.
President Barack Obama and aides said gas prices are a long-term challenge that require an “all-of-the-above” response that includes new fuel-efficiency standards and alternative energy sources as well as increased oil production. No instance exists of the oft-repeated Republican claim he wants prices to go higher.
He did say the following: “Look, here’s the bottom line with respect to gas prices. I want gas prices lower because they hurt families, because I meet folks every day who have to drive a long way to get to work. And then filling up this gas tank gets more and more painful, and it’s a tax out of their pocketbooks, out of their paychecks. And a lot of folks are already operating on the margins right now.”
The White House recently released a report from various federal agencies that laid out steps taken to achieve greater energy independence and affordability. Among the accomplishments: new fuel-efficiency standards, an increase of 120,000 barrels per day in domestic oil production last year, and the approval of dozens of renewable energy projects.
The report also notes that domestic oil production has risen each year that Obama has been in the White House, that the United States is importing about 24 percent less oil each day compared to when the president first took office, and that the nation has led the world in natural-gas production since that same time.
Many oil and gas companies are sitting on existing leases. A March 2011 report from the Department of the Interior showed that the oil and gas industry was not using half of its onshore federal leases at the time. Industry advocates say that isn’t the case any more, since high prices have made drilling more lucrative. They argue that the government should open up new lands to prepare for future spikes.
It’s absurd to think the president wants the high gas prices since they are threatening the economic recovery and his re-election.
All the reports say he is losing ground with citizens as the gas prices climb. Yet it is acknowledged the president, any president, can do little about gas prices. Newt Gingrich claims to have a policy to reduce it to around $2.50 a gallon. If so, why doesn’t he pony up that information to help us all right now?
Drill, baby, drill is not the answer. In 2011, the nation set a record for the number of oil rigs in operation. The U.S. has whittled its dependence on foreign oil down to less than 50% of its needs, from 60% in 2005.
Some point to the president’s not approving the proposed Keystone XL pipeline from Canada, which would cross through America’s agricultural heartland, the Missouri and Niobrara Rivers, the Ogallala aquifer, sage grouse habitat, walleye fisheries and more. Those who are not concerned about the drinking water for the millions of citizens that could be affected or from the agriculture there that could be damaged just point fingers at the president.
Some say Keystone XL will not lessen U.S. dependence on foreign oil, but will transport Canadian oil to American refineries for export to overseas markets. It is an export pipeline. There is no guarantee this gasoline would be sold to Americans.
According to presentations to investors, Gulf Coast refiners plan to refine the cheap Canadian crude supplied by the pipeline into diesel and other products for export to Europe and Latin America. Proceeds from these exports are earned tax-free. Much of the fuel refined from the pipeline’s heavy crude oil will never reach U.S. drivers’ tanks.
High gas prices are being impacted by a number of situations such as Iran’s threat to close the Strait of Hormuz and the increasing players on the world market for oil, such as China and India. Anytime someone sneezes in the Middle East we see the price increase at the pumps. Incidentally, when those prices go up, unless I am mistaken, the local stations do not get that additional money.
U.S. demand for oil has been declining since 2007. New fuel-efficiency standards mean that this trend will continue once the economy gets back on track. In fact, the Energy Deptartment report on Keystone XL found that decreasing demand through fuel efficiency is the only way to reduce mid-east oil imports, with or without the pipeline.
TransCanada predicted that the Keystone I pipeline would see one spill in seven years. In fact, there have been 12 spills in 1 year. The company was ordered to dig up 10 sections of pipe after government-ordered tests indicated that defective steel may have been used. Keystone XL will use steel from the same Indian manufacturer.
Those who oppose the pipeline have been potrayed as wild-eyed environmentalists, while those opposing it actually include Republican governors, ranchers, farmers and civilians of every kind, as well as many environmental groups.
We could dip into the Strategic Petroleum Reserve, which exists, first and foremost, for the president to use should the United States be confronted with an economically-threatening disruption in oil supplies.
A president has directed release from the SPR three times and Congress twice.
There is also an element of speculation–those in the commodities market betting the price will continue to increase, helping make that happen.
I don’t like paying more for gas. My greatest fear is it will stop the recovery. I feel for those people who have to drive in their jobs or to jobs out of town. But this is more complex an issue than simply saying the president should just do something.
I certainly do not know all the factors involved in this but I am trying to read and understand. It is not a simple issue.
