Post Scripts: Pain at the gas pump

The big jump in gasoline prices couldn’t have come perhaps at a worst time. With the price of regular at $3.50 a gallon or more, along with a major collapse of the housing market, plus the seizure of the financial sector, it is hitting the economy like a fist in the face to the economy that is almost in a state of recession or mighty close to one. Those of us who cannot ever forget the Great Depression era are quite naturally concerned with the dangers of a major decline in the overall economy.

I’m not one to place the entire blame on the White House for the pain at the gas pump but its shortsighted energy policies enthusiastically focused on increasing the energy supply with little attention paid to conservation effort and improved fuel-efficiency – means the U.S. is much too dependent on oil that is both destructively expensive and ruinous for our environment.

There are many reasons for the fix we’re in. Soaring demand in fast-growing nations like China and India means there is little oil to spare anywhere. The continuing mess in the financial markets goes directly back to the White House who must take a big chunk of the blame with the result of prices being driven even higher, as investors have bought oil and other commodities as stocks and the dollar plunges.

In the meantime, our president’s strategy for ensuring our energy security is based on one thing: getting more oil by drilling in the Arctic and asking that mental wizard Vice-President Dick Chaney to ask his buddies in Saudi Arabia to pump more.

Neither action would ever produce enough. Not everyone is unhappy with oil at $100-plus a barrel. Such governments as Iran, Venezuela, Sudan and Russia are soaking up the profits and enjoying the political gains that accompanies such riches.

Here at home the news is bad and will get worse. Consumer prices rose more than four percent last year largely because of energy prices. Americans have had to reduce spending on other consumer goods, which weakens our economy. The risk of inflation leaves the Federal Reserve with little room to maneuver. If anything good comes out of this mess it would come from more understanding by all concerned that the era of cheap oil is definitely over.

What ought to be next is the nation focusing on developing clean alternative energy sources plus reducing our huge oil appetite, a strategy that has aided other nations well. Take cars for example. Until last December, Republican and Democratic administrations had refused to raise fuel-efficiency standards for 30 years. Plus, raising the gas tax remains a political nonstarter. By contrast, in England gas at the pump costs around $7.70 per gallon of which are about $4.90 is taxes.

In France taxes account for about $4.60 of the retail price of $7.50 a gallon. Not surprisingly, their automobiles get much better gas mileage than the guzzlers still popular in the good ‘ole USA. Higher taxes on energy means other rich nations are more energy-efficient across the board. The average German or Japanese car uses little more than half the energy consumed by the average American. Americans are beginning to understand the situation. Gasoline demand declined for the first 11weeks of this year for the first time since 1997. That is far too little of course and government policy is lagging far behind the growing problem.

The landmark energy bill passed in December tightened fuel standards for the first time since 1975 – demanding a 40 percent increase in car and truck fuel efficiency by 2020. The new standards would have reduced gasoline consumption by only two million barrels a day, which amounts to a 17 percent cut in projected gasoline consumption.

Much more needs to be done to prepare the American economy for a world of scarcer, more expensive energy sources. To start, America has to replace the oilmen in the White House with leaders who have a better grasp of the economics of energy and the interests of all Americans as a priority. Big oil has had its hey-day in Washington and now is time for the people to kick the money-grabbers out and concentrate on the needs and desires of all Americans. It’s long overdue!