Tuesday, March 8, 2011

The Price of Freedom

Gas prices are creeping back up to $4/gallon again, and everyone is going to be looking for someone to blame for interfering with Americans' God-given right to cheap gas. This time people should not have to look much beyond the biggest headlines in the morning paper to notice that there is a large-scale rebellion going on in one of the world's biggest oil-producing nations, which of course has everyone nervous about supplies. When that happens, prices tend to go up.

My modest suggestion would be to try not to panic at the prospect of higher gas prices.  Think about how prices are still much lower here than in Europe or many other places, where gas is taxed at high rates. Think about how higher gas prices might be seen as an opportunity to drive less and conserve more, which is what we should all be doing anyway. And most of all, think about how graceless it sounds to complain too loudly about the inconvenience of paying a few more dollars to fill up our gas tanks, at a time when people are dying in Libya to attempt to obtain their freedom. We can take this disruption in stride.


  1. If you can afford the increase in prices I guess you can take it in stride. Your comments sound as misplaced to me as my comments about altering social security sound to you. I think your comment was something like "whenever someone talks about altering the structure of social security benefits I hear them talking about taking from the poor". Do you think those of us living on the edge who are on fixed income or have incomes that are being reduced can afford higher gas prices and higher food prices as a result of higher energy prices? America is extremely rich in coal, gas and oil. Yes, it is not sustainable and we will shift to other sources; but I'm getting tired of people saying we can't access it on line for 10 years -- or that we shouldn't. We have heard that for the last 10 years. Say it ain't so, Joe!

  2. Lots of people can't afford gas prices the way they are now. I have sympathy for those people, but any price of any commodity will put it out of reach of some people. The thing about gas, however, unlike some other necessities, is that we can to some extent control how much we use. People who find it difficult to cope with increased gas prices might have to take the bus more often. Many people can't afford gas at $3 or even $2 a gallon, and take the bus now.

    An even better solution would be to tax gasoline at much higher rates, and use some of the proceeds of those taxes to fund public transportation or energy assistance for the poor. That would provide incentives for everyone to reduce waste, as well as helping those in need, and by reducing demand, would actually drive the price of crude oil down, and help with the country's balance of payments.

    But the point of my post is that it sounds a little whiny to complain about slightly higher gas prices while people are laying down their lives to drive a dictator out of power. If that causes prices to increase, we should just try to accept it gracefully, I think. It doesn't honor the sacrifice of people who are being mowed down by Qaddafi's army for us to act like we are the victims. Don't you agree with that at all?

  3. No, I don't agree with your last paragraph at all. It is a red herring. I am concerned that Qaddafi's army is killing it's own people but I don't tie that directly to gas prices. I urge you to keep those issues separate for now in the interest of actual discussion of your point. You want higher gas prices regardless of what it does to our economy or how it impacts poor and middle class families.

    Libya produces 2% of the worlds oil and half of that is still flowing. That's 1% gone missing. That doesn't account for the spike at the pump. There are ten gas stations in San Diego charging about $4.50 a gallon and that gas was purchased a long time ago. Those stations are gouging us and when I buy I ask the guys and gals behind the registers to pass along my displeasure to the owners. I make a mental note and I won't go back there. Those vendors are uscrupulous. We also see speculators driving up oil prices; both groups are out to make a buck off you and me.

    The first group will sort itself out over time because there is competition, but they are greedy and we have every right to loudly complain and still have deep concern for Libyans who are dieing -- and our military in harms way. The speculators can easily be handled by Obama reversing course (like he has on Gitmo) and admitting that he was wrong about halting drilling in the Gulf. As well, get busy drilling in ANWR. There are 19 million acres up there and by drilling in 7-8% of it in area 1002, along with the gulf, speculators would drive the cost of oil down so fast we wouldn't be talking about this.

    It seems to me your real point is that you are pleased when oil and gas prices soar as you see it as a great way to lower consumption. You might let that stand on it's own. Then, whatever party and/or candidate that agrees with you can take a seat on the sidelines in 2012.

  4. When you say speculators drive up the price of crude oil, what that means is that more oil traders decide to go long in the market because they anticipate that prices are rising. And by doing that, they drive up demand and cause prices to rise even more. That is the way markets always work. And the trigger for that kind of escalation is usually some event like unrest in the Middle East, as is occurring right now, and as we have seen in previous periods.

    Would more drilling in the US lower demand? I'd be pretty skeptical about that. And it's not like domestic suppliers charge any less than any other suppliers anyway, so it seems doubtful that increasing domestic supplies would have a huge impact on world oil prices. Saudi Arabia and a number of other countries also have the ability to limit production to try to counter the effects of other nations' increases in supply, so as to keep prices high.

    But you are right that I do try to see the bright side of rising oil prices because that seems to me to be the only way to reduce consumption. And it also seems to me that the best way to do that would be to tax gasoline at about the same rate that we tax cigarettes, because our use of gasoline is just as harmful to our health. It works quite well in Europe. But you're also right that that position is not at all politically popular in this country. And that's because people do not seem to realize that all the money we raise from taxes comes back to us. People seem to think we ship tax money somewhere else.

  5. Thanks for answering me in a straight forward way. The thing about speculators is that they are gambling -- about how others will react. It's not always based in fact. If America announced it was going to resume agressive drilling in the gulf, the price of crude would fall. Coupled with drilling in ANWR I believe it would fall quickly to low levels. It is going to take a generation or more to get off oil. In the meantime, in my view, we cannot afford (finacially or in terms of our security) to ignore our own resources. Europe is in a hell of a mess. Russia has them over a barrell with natural gas and oil. Talk about winning the new Cold War. Europe has lost!

    And what about the United States and it's need of Rare Earths for the new and green technologies you and others support over oil? What would you suggest we do if China -- who controlls 90% of the worlds production of REs and is embarking on deals to secure 97% of all supplies sold globally -- decides to limit exports?

  6. All I know about Rare Earth is that it was a band we used to listen to. But I'm wondering how you can be so sure that aggressive drilling will cause the price of crude oil to fall. The price of crude oil seems to have as much or more to do with demand as it does with supply. There are so many oil producing countries around the world that it doesn't seem like any one country, even us, can affect the global supply of oil all that much.

    As economies around the world expand, and demand continues to increase dramatically in places like India and China, my guess is that the price of crude oil is going nowhere but up, no matter how much we drill. We cannot outpace demand, because oil is getting more and more scarce, while the world keeps using more and more of it. So if you really want to cause prices to fall, the best way is to start using less of it. And the best way to encourage people to use less oil, is to tax the hell out of it. I believe that will do more than drilling, but what do I know?

  7. Ah, "Rare Earth"! The first white band success that was as part of Motown -- including covers of the Temptations' "I'm Losing You" and the even more successful "Get Ready".

    As far as the price of crude being tied to supply -- that is true on a pure level -- but it doesn't explain the gyrations of the cost of gas here in the US. Those gyrations are due to perception, which Obama has manipulated.

    There is plenty of oil. When the current President came to office the average cost of a gallon of gas in America was $1.58. We didn't go from $1.58 to $4.50 a gallon in 2.5 years because supply around the world diminished. It looks like he is either unaware or ... he shares your view of the situation; that lowering gas consumption is more important that the quality of life the majority of Americans enjoy.

    You said higher prices of gas leading to lower gas consumption is healthy. That is flat out wrong. In fact, higher costs leading to lower consumption will detract from our quality of life and our health as a whole; leading to higher medical costs and decreased quality of care for our children. This is not hard to see if one thinks it through.

    The argument that health and our well being will be improved by raising the cost of gasoline and lowering consumption is fallacious. I know a bit about health and it is tied to nutrition! You seem willing to have the middle class and poor suffer because you don't like oil consumption. You say let them ride a bus. Are you kidding? We have kids, school, day care, sports programs, music classes, the arts ... there isn't room for a bus. I have spent my life teaching patients how to be healthy via nutrition. Don't you see that as petroleum prices rise that the cost of food rises? You must know that eating fresh fruits, vegetables and whole foods with proper macronutrients is the key to health and cancer prevention. Yet you would let gas prices rise to the point where eating healthfully is no longer an option due to cost. By pushing low income consumers to fast food you increase medical costs and end of life care. At times, the Progressive movement appears so out of touch it is maddening.

    You steadfastly oppose raising the age of social security qualification but support higher gasoline prices for gasoline consumption. You have it backwards if you are out to support the welfare of the poor.

  8. Don't even get me started about the failed agenda to use corn for fuel and the government subsidizing it!

  9. Californians just can't imagine living without consuming enormous quantities of gasoline. But I lived a large part of my life in New York City, where many kids don't even bother to get their driver's licenses when they turn 17, because, what for? So I have trouble seeing the connection between using a lot of gasoline and good health.

    Yes, I am in favor of continued high benefits for Social Security recipients, and also high gas taxes. Somehow that makes me in favor of forcing poor people to eat fast food? Sorry, I don't see that.

    In Europe, where gasoline prices are about triple what they are in the US, mainly due to very high taxes, do people eat a less healthy diet than here? I don't think so. They just make do with one tiny car per family instead of two of the gas guzzlers that Americans prefer, they live closer together, and they ride the bus or scooter or bicycle to work.

    Gas prices dropped so much at the beginning of Obama's administration because we were in the depths of recession. Demand was low; supplies were still high. Now demand is going up fast, and people are worried about supply disruptions. So prices are going back up to where they were a few years ago. Where is the manipulation?

  10. I don't use enmormous quantities of gasoline. I use little as I work at home and ride a bike. I do eat enormous amounts of fruits, veggies and lean protein. The fact that you can't see the connection between the cost of oil and the cost of being healthy is all too clear to me. That's why I attempted to bring it to your attention. It's not working, it's not going to work, so we might agree to disagree (strongly disagree).

  11. Of course I wasn't talking about you in particular Kevin. I was talking about all those solo drivers in enormous SUVs passing you as you are riding your bike. And I do understand that if the price of crude oil goes up, the price of a lot of other things goes up, including food. Otherwise, I have no problem agreeing to disagree. These discussions wouldn't be as interesting if we agreed about everything.

  12. Ha! So true. Indeed, they are interesting.

  13. Well, I drive an SUV and sometimes ride a bike, so I disagree with both of you. Speaking of bikes, I sure hope you read KP's comments about what happens to people who don't wear helmets.

  14. Samj81 ... way to buckle up!

  15. << I lived a large part of my life in New York City, where many kids don't even bother to get their driver's licenses when they turn 17, because, what for? >>

    Comparing life in Los Angeles with life in the city of New York is not particularly helpful. They are very different in geographic density. Having a car in the densely populated parts of the city of NY is almost a liability. Conversely, two cars in LA is necessary for most families that have two working parents (most of the population).

    Again, you seem quite willing to have middle to lower income families suffer in many critical ways because of your (in my mind) misplaced dislike of oil. It appears inconsistent with your (and my shared) 'concern' when it comes to Medicare and Social Security. You must be torn.

    Day is not Night and Night is not Day. To support a policy that Obama does -- a conscious policy to reduce the production of domestic oil -- that will drive hundreds of thousands of people out of work, lower the quality of life and health for those struggling to get by -- and to increase the likely hood of another deep recession leaves me shaking my head. It is my hope that at some point the most green of the green in our generation (most happen to be relatively liquid) will see the inconsistency.

  16. Actually U.S. production of oil was up last year. http://eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus1&f=m But U.S. production is a drop in the bucket as a share of the world market for crude oil, while U.S. consumption is of course an enormous share. I don't have time right now to look up the exact numbers, but you should do that. Many experts have said that we cannot--WE CANNOT--drill our way out of this problem. If you took some time to look at the numbers, perhaps you would agree. It's really not a question of whether I like oil or don't like oil. Even George Bush admitted that we are addicted to oil. We have to cure our addiction to solve this problem.

  17. That data you cite is a result of the Bush administrations efforts to increase oil production. Nobody -- nobody -- believes Obama is increasing oil production. C'mon! Everything the Obama administrastion is doing will result in declines going forward. Lets not jumble truth to suit arguement. The Presidents speech was one of the most disengenous ones I have heard. And I like the guy; but he was flat out misleading at best and dishonest at worst.

  18. It's not about our "right" to cheap gas it's about the fact that energy sources exist here so people are needlessly paying more because our government artificially creates scarcity in the marketplace.