Sometimes I have to wonder, just how much of the current increase in the price of gas is controllable and how much is due to factors outside the scope of manipulation? We've seen gas prices shoot up over .25 cents a gallon within the last month and it's heading higher as the weeks go by. The price of a barrel of oil is hanging around the $55 mark but yet the price of gasoline continues to rise. Some say it's because of the demand from other countries as their economies rev up. Some say it's because of the limits OPEC can produce a year. Others say it's because of bottlenecks at the refineries. Some would say the falling dollar has a large impact. And then there are the future speculators who are being included in the blame for thinking the prices will continue to increase on the trading market. The funny thing is that they are all a part of the increase equation. A falling dollar means we pay more since it takes more U.S. currency to buy the same quantity. OPEC can only supply so much to a world that is demanding more and more, especially with developing countries like China and India who are about 20 years behind the U.S. in their economies and with an even larger population, are finding that in order to maintain a growing GDP they need more fuel for energy for production. There are limited refineries and we haven't built a new one in decades to help meet the increase in demand for processed fuels so even at full capacity they are unable to keep up with demand. As a result of these factors the futures market see the same thing, rising prices. Traders are betting on a supply shortage and thus cause the prices to increase on the open market.
So what can the U.S do about all of this. Probably more than you realize.
Fuel Economy.
Fuel economy is something that needs to be addressed. Raising the federal minimum fuel economy requirements for new vehicles would help cut back on the amount of fuel needed. Sure it may put a strain on the car companies at first but they are very resilient at finding new ways to increase miles per gallon on vehicles. If you were to look at the MPG of vehicles made back in the 70's and 80's you would find that their MPG estimates were much lower than today. Lets get them onboard to increase the MPG on every vehicle. Of course the auto industries don't like this idea since it would take some investment by them to change the current status quo and they spend a ton of money in D.C. to make sure congress knows this. I can't blame them, change is hard, but the change will have to come and it's better to do it sooner than later. The consumer is ready for better fuel economy, it's time they got onboard also. My take; minimum MPG 26 city on all passenger vehicles. Minimum 23 MPG on all trucks and SUV's.
Build more refineries.
This is a simple solution but will not be a fix all one. We need at least 2 more refineries in the U.S. to ensure a consistent flow of refined fuels. In addition, we need to eliminate one of the fuel grades. 95% of cars will run on regular unleaded and probably the last 5% would run on the mid-grade. We don't need to have 3 grades of gasoline. The high grade one is merely a profit monkey for the gas companies. Eliminate the high octane grade and offer just 2 choices to streamline the refining process.
Where we get our oil.
There are limited places for us to get oil. The problem is we haven't allowed ourselves to get the oil we have here at home. Open a very limited portion of ANWAR to allow us to get the oil reserves there. Although there is a trade off with the natural preservation of the area, we have the technology and equipment to make sure the impact is minimalize.
Strengthen the Dollar.
This is a little harder to do but will benefit more than our prices at the pump. If we reduce the debt and work on ways to strengthen the dollar the price of oil will fall as the dollar gets stronger. Picture a scale with the dollar on one side the price of oil on the other. As one goes up the other falls. It's a simple strategy but one that's harder to make happen. We need the government to act to make the dollar stronger and this in turn will also help our economy if we can have the debt reduced, taxes kept low, federal spending in check, and find ways to compete better in the world markets.
Everyone and no one is to blame for all of it. We have become dependent on foreign oil and that's not a good thing no matter how you slice it. It gives another country an undue influence on our stability. That needs to change, and it needs to change very soon. We are one of the most innovative countries in the world and need to find more options when it comes to our power supply needs. Diversity is the key. Solar and wind power along with fossil fuels can help create a diverse source of energy providers if only they were encouraged more. Hydrogen power is another promising new source. I'm sure we can find more, better ways to feed our energy needs.
It's something we need to think about before we are forced to deal with an energy crisis.
