Rising gas prices here to stay

For the first time in nearly three years, gas prices at the pump haven’t risen significantly year-to-year. If you remember my post from this time last year, I wrote how prices had crept up to nearly $4 per gallon nationwide.

From 2009 to 2011 prices rose by an average of 65 cents per year, according to GasBuddy.com, and only varied by 5 cents between 2011 and today. While my wallet may still be protesting the cost of gas, I am somewhat mollified that it could be much worse today, if the past three years are any indication. Perhaps, I’m resigning myself to the idea that gas is just going to be higher and that’s that.

I read an article recently on Louisiana’s Oil & Gas Association’s blog about cheap gas being a thing of the past, and it was reinforced when I was browsing the Internet today and came across the Debate Club, a site where great minds in our society today debate relevant topics and readers vote for the most compelling argument.

On the topic Is Obama to blame for high gas prices, most readers sided with Daniel Simmons, Director of State Affairs at the Institute for Energy Research that yes, the administration has done little to reduce oil prices.

I, however, found that Severin Borenstein’s, E.T. Grether Professor of Business Economics and Public Policy at U.C. Berkeley’s Haas School of Business, argument that we must prepare the world for higher gas prices resonated much deeper.

He argued that the while it is easy for the public and politicians to blame the President for rising gas prices – in reality, there is little that a President can do to change the prices.

Even if the United States was to increase domestic production (which I do believe we should do, but not necessarily because it will lower the price at the pump), it would only put a dent in the supply and demand chain – leaving prices at around the same that they are.

Borenstein contends that growing demand in China and India, as well as the fact that the actual physical supplier of most of our oil, Saudi Arabia, holds more spare capacity than America could if all federal lands were open to be drilled in the next decade, are to be held responsible for rising prices – and both are factors that won’t be easily changed.

Gasoline is what fuels America – literally and figuratively. According to the Federal Highway Administration’s website, Americans drive on average, 16,550 miles per year which is equivalent to four roundtrips from New York City to Los Angeles.

Our fuel consumption isn’t going to slow down overnight and unless America’s economy begins to plummet again like it did in 2009 when gas prices were so much cheaper, we aren’t going to see much lower prices at the pump.

I love the way the LOGA post ended, and end on the same note: “Cheap gas, or a job and a roof over your head? That’s pretty much what it comes down to.”

What is your perspective on rising gas prices? Can Obama influence prices or should we settle in for higher gas prices?


Source: SherWare Blog

Phil Sherwood

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