Why High Gas Prices Are Good

I know the price of gas is crushing some folks but here are a few reasons why high prices are good.

From the Wisdom Journal
2. High gas prices are causing people to drive slower to conserve fuel. What’s the positive here? Fewer highway deaths. According to an article in USA Today, there have been fewer highway deaths every month since October of 2007…just when the current run up in gas prices began in earnest.
3. High gas prices cause families to plan their summer vacations closer to home. As a result, families can discover the great attractions offered nearby. They will spend less time in transit and more time enjoying each other’s company as well as more time enjoying the attraction and their vacation.
4. High gas prices are causing some Americans to rethink (or at least reduce) their attraction to “stuff.” We’re a consumer society without a doubt, but these high gas prices have caused boaters to downsize, RV’ers to downsize, giant SUV drivers to downsize. We’re finding that our needs can be met quite nicely with something smaller, more fuel efficient, and practical. Or maybe we can be satisfied with what we already have.
5. High gas prices are causing more people to ride bicycles or walk to work. What would happen to our society as a whole if a significant portion of the population had to exercise just to get to work? We would potentially see our health care costs go down and our life expectancies go up!
6. High gas prices are increasing interest in mass transit and van pools. What is the direct result? More interaction between people, fewer headaches trying to find a parking space, less fuel consumed, more ideas exchanged (in the van), and more revenue for cities that utilize mass transit systems. There's more.

High gas prices have also tipped car companies to start cranking out smaller cars and they're starting to focus on alternative fuel engines.

Also, offshore drilling will NOT lower gas prices. Here's why

McCain's Drilling Talk Makes Big Oil Give

They like it so much that last month, they donated to his campaign.

Swamp: But it has caught on with the oil industry, whose executives contributed $1.1 million to McCain's presidential campaign last month, the Washington Post reports today on an independent watchdog group's study of the McCain campaign's fundraising.

Three quarters of McCain's oil haul followed the senior senator from Arizona's call for an end to the long-standing congressional moratorium on off-shore oil-drilling, the Post notes. And that $1.1 million take from Big Oil executives in June outstrips the industry's giving before that: $208,000 in May, $283,000 in April, $116,000 in March, by the Post's count.

Does anyone really believe that McCain wants drilling because Americans are suffering hardships? He hails from the Bush Cheney administration, the presidency of oil.

WaPo: McCain said the policy reversal came as a response to rising voter anger over soaring energy prices. At the time, about three-quarters of voters responding to a Washington Post-ABC News poll said prices at the pump were causing them financial hardship, the highest in surveys this decade.

Opening vast stretches of the country's coastline to oil exploration would help America eliminate its dependence on foreign oil, McCain said.

"We have untapped oil reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production," he said. "It is time for the federal government to lift these restrictions."

And some are saying McCain shaped his energy policy so he could get more money from the oil companies.

"The timing was significant," said David Donnelly, the national campaigns director of the Public Campaign Action Fund, a nonpartisan campaign finance reform group that conducted the analysis of McCain's oil industry contributions. "This is a case study of how a candidate can change a policy position in the interest of raising money."

Brian Rogers, a McCain campaign spokesman, said he considers any suggestion that McCain weighed fundraising into his calculation on drilling policy "completely absurd." Rogers noted that oil and gas money in June still accounted for a very small fraction of the $48 million raised by the campaign and by the Republican National Committee through its Victory Fund.

"John McCain takes positions because he thinks it's the right thing to do for America," Rogers said. "He has a long track record of doing that. And he's often made decisions that hurt with his fundraising base."

Economists have already debunked offshore oil drilling as a solution to foreign oil dependence. Even California Arnold Schwarzenegger, a supporter of McCain, said McCain is blowing smoke. The only solution is a longterm one that is made up of wind, solar and other kinds of renewable energy. In the meantime, we have to cut back on our use of oil. We have to sacrifice. 

Why we won't have low gas prices ever again, no matter what John McCain tells you: This time it's different.

Earlier oil shocks have had obvious causes. In October 1973, OPEC raised prices and declared an oil embargo against the United States and other countries that had supported Israel in its war earlier that month against its Arab neighbors. The embargo ended in March 1974, but pricing power had shifted from the oil companies to the producing countries. In 1979, prices soared again after the Iranian Revolution curtailed output and consumers and oil companies went on a spree of panic buying.

Now, however, there is no one culprit and no single international crisis to blame. Instead, world demand has been increasing faster than supply, steadily squeezing oil markets.

This in turn has signaled to investors that prices are inevitably heading higher. Financial players, such as Wall Street banks and hedge funds, have bet just that, investing tens of billions of dollars in oil futures. Critics on Capitol Hill and elsewhere say this speculation has turbo-charged the market, helping lift prices even more.
Read the whole thing -- it's a great explainer, what we need more of.

Oil and Crack

This is a good analogy by NYT'sThomas Friedman: 

When a person is addicted to crack cocaine, his problem is not that the price of crack is going up. His problem is what that crack addiction is doing to his whole body. The cure is not cheaper crack, which would only perpetuate the addiction and all the problems it is creating. The cure is to break the addiction.

Ditto for us. Our cure is not cheaper gasoline, but a clean energy system. And the key to building that is to keep the price of gasoline and coal — our crack — higher, not lower, so consumers are moved to break their addiction to these dirty fuels and inventors are moved to create clean alternatives.

Unfortunately, I think the democrats have to offer Americans a short-term solution, in addition to a long-term solution, even though there may not be a short-term solution other than cutting back on driving and becoming more frugal in other areas. Many Americans are hurting and they want the fix.

Even Saudis Are Looking Beyond Oil

WaPo: Over the next few years, Saudi officials say this stretch of desert will be transformed into a buzzing hub of scientific research and development, with cutting-edge universities, hospitals and housing for more than 130,000 people attracted by the idea of living in the city where Islam's prophet Muhammad is buried.

The project, called Knowledge Economic City, represents a first serious step by Saudi Arabia toward building a post-petroleum economy. It is one of six major industrial centers planned to rise over the next 15 years. At a cost of more than $100 billion, the sites are expected to provide housing and jobs for the country's fast-growing population, half of which is younger than 21.
....
But Saudi officials have long feared that too-high oil prices would push the world toward alternative fuels, a concern captured by one former oil minister's tart reminder that "the Stone Age did not end for lack of stone."

To meet rising demand, as well as to slow the world's rush to develop alternative energy sources, Saudi officials have raised oil production by 500,000 barrels a day since May.

Though increased production means the Saudi reserves will be depleted faster, the government is using a burst of additional capital to develop an economy it hopes will eventually be untethered from the price of oil.

The new cities "are part of a broader effort to diversify the economy away from oil and away from its reliance on the public sector. The cities are intended to develop more of a non-oil economy, well before the oil runs out," said Jane Kinninmont, an analyst at the Economist Intelligence Unit, a research and advisory company that provides industry and management analysis of countries around the world. Read the rest because it's a good one.

Pandering Alert Pandering Alert

Keep the coffee brewing. Let's stay awake. I know we have a ways to go in this general election but we must stay on our toes.
The Bush-McCain pander to big oil.

NYT: It was almost inevitable that a combination of $4-a-gallon gas, public anxiety and politicians eager to win votes or repair legacies would produce political pandering on an epic scale. So it has, the latest instance being President Bush’s decision to ask Congress to end the federal ban on offshore oil and gas drilling along much of America’s continental shelf.

This is worse than a dumb idea. It is cruelly misleading. It will make only a modest difference, at best, to prices at the pump, and even then the benefits will be years away. It greatly exaggerates America’s leverage over world oil prices. It is based on dubious statistics. It diverts the public from the tough decisions that need to be made about conservation.

There is no doubt that a lot of people have been discomfited and genuinely hurt by $4-a-gallon gas. But their suffering will not be relieved by drilling in restricted areas off the coasts of New Jersey or Virginia or California. The Energy Information Administration says that even if both coasts were opened, prices would not begin to drop until 2030. The only real beneficiaries will be the oil companies that are trying to lock up every last acre of public land before their friends in power — Mr. Bush and Vice President Dick Cheney — exit the political stage.