Chris Berry On The Net

In yet another demonstration of the remarkable gullibility of the American electorate, the price of gasoline has recently taken center stage in the presidential election debate. As we’ve come to expect, candidates from both sides are lining up to tell the voters exactly what they want to hear, rather than what they desperately need to know. The fact of the matter is, the president has no more power than you or I to bring about meaningful short-term changes in the price of gasoline. Just as the president does not “manage the economy,” he does not have the power to manipulate commodity prices in the global marketplace.

The two most common proposals that arise whenever we see a spike in gas prices are to suspend the federal tax on gasoline, or to tap the nation’s Strategic Petroleum Reserve. Doing away with the federal tax for 90 days would save the average consumer no more than $30.00, but would reduce federal funding for highway construction and maintenance by $7 to $10 billion. At a time when our roads and bridges are already crumbling, this is clearly a foolish trade-off.

The Strategic Petroleum Reserve is intended to provide an emergency buffer in the event of a catastrophic interruption of our nation’s oil supply resulting from political instability or natural disaster. It was never intended as a tool for manipulating oil markets, and, at the current volume of roughly 700 million barrels, it is simply not a large enough stockpile to have a substantial impact on global oil prices. Given our current consumption of roughly 21 million barrels per day, the SPR represents slightly more than a 30 day supply for the United States, or roughly 23 days of OPEC output. Any price relief that resulted from tapping this supply would be very small and very short lived.

The politicians who put forth these suggestions do so knowing full well that they will have no meaningful impact, but given the choice between cheap political stunts, and telling voters the difficult truth, they choose the easy path every time. The truth is that there is no short term solution. While the rapid increase in the price of crude oil is due partly to speculation, that speculation is based on a valid assumption. As emerging economies like India and China continue to grow at a blistering pace, global competition for oil and other commodities will only intensify.

The U.S. economy and our standard of living are the envy of the world, and they are based on our wildly disproportionate per capita consumption of the world’s known energy resources. As other nations race to catch up, global competition for fossil fuel resources will make this level of consumption unsustainable. The sooner we wake up to this new reality, the better prepared we will be to make the adjustments necessary to maintain our standard of living for current and future generations.

Instead of relying on parlor tricks and political slight of hand, this is what our presidential candidates should be telling us. As a nation, there are three things we must begin to do immediately; focus on conservation, dedicate substantial resources to alternative energy research, and wake up to the realization that if we expect to maintain our standard of living, there is an ecological price we must be willing to pay.

Conservation is the easiest item on the list to address, and the one most likely to produce meaningful short-term results. This is pure speculation, but my guess is that we could each reduce our consumption of energy by upwards of 25% without any measurable sacrifice in our lifestyles. Simple changes like lowering the thermostat on our water heaters by a few degrees, or raising our AC temperatures slightly would produce large aggregate savings. Switching to compact fluorescent light bulbs, adding a layer of insulation to our attics, and installing energy efficient appliances in our homes are all small steps that will ultimately result in substantial savings.

Altering our driving habits is another measure that will result in a major societal payoff. A few minutes of extra planning each week would allow us to avoid unnecessary trips and consolidate others. Many Americans have jobs today that don’t require them to be physically present in the workplace. If employers would encourage these people to work from home even one day per week, the aggregate energy savings would be substantial.

American drivers have always shown a preference for large powerful vehicles. Given the current state of technology, this is an area where we must be willing to make a sacrifice. I’m not suggesting that we should all drive hybrid sub-compacts, but unless you have 7 kids, you don’t need a 9 passenger SUV for daily personal transportation. Just as animal rights advocates have succeeded in making fur less fashionable, we should all attempt to shame our friends and neighbors into giving up these gas-hogging monstrosities.

The search for viable large scale alternative energy sources should be one of our government’s highest priorities. Unfortunately, the best we have to show for our efforts so far is the boondoggle of corn-based ethanol. If we redirected the tens of billions of dollars that we squander every year on farm subsidies into research and development of legitimate energy alternatives, and if we go about the task with the same sense of urgency that we applied to the Manhattan or Apollo projects, we could solve the problem in a generation. We can only succeed in this effort, however, if our leaders are willing to make decisions on the basis of sound science rather than aggressive lobbying.

There is a sizable and vocal segment of our population who apparently believe that we should abandon our traditional energy sources for environmental reasons, even before we have a legitimate alternative in place. The sad fact is that our entire economic infrastructure is based on fossil fuel consumption. Even if we discover a remarkable new energy source tomorrow, we still face a decades long transition period, during which we will continue to rely heavily on traditional energy sources like oil and coal. Given that the bulk of the world’s known productive oil reserves are held by countries that do not have our best interests at heart, we are foolish to ignore domestic production opportunities as a near-term alternative to imports. We can’t drill our way out of the problem indefinitely, but we can soften the economic impact while working toward a more sustainable solution.

The United States has substantial known reserves of oil in the Gulf of Mexico, off the coast of Florida, and in Alaska, which for various political reasons have been placed off-limits for production. If our pandering politicians truly wanted to make a difference in the price of gasoline, they should take a lesson in basic economics. Speculation in the oil markets is based on the anticipated future price of oil. A vote in the Senate today to allow drilling in ANWR would place immediate downward pressure on global oil prices.

Whatever the future holds, we must accept the fact that our presence on the earth is going to leave a mark. The idea that we can meet the energy demands of 6 billion people without some negative impact on the environment is simply preposterous. We cannot hope to solve the problem until we all demonstrate a willingness to compromise. As long as wind farm developments continue to be met with the same protests as oil refineries and nuclear power plants, no meaningful progress is possible.