March 5, 2012
Gasoline Prices and the Election
I find myself in the odd position of congratulating President Obama in two consecutive columns, but it is his due. Last week our president gave what was billed as an important speech about gas prices. It was that and more. Among the themes of the speech was the need for growth in alternative energy, a declarative statement on the limitations of current domestic exploration on short term gas prices and the quite truthful pronouncement that a sitting president has almost no power over gas prices. This last claim comes as an astonishing admission of the limits of executive power from a man who only three years ago declared his electoral victory as the date "the rise of the oceans began to slow." Live and learn.
The president made this speech because over the coming months we are likely to again feel the rising pinch of high gasoline prices. If I could perfectly forecast gasoline prices, I would quite easily be the richest man in the world. I cannot. But I can get close enough with such a prognostication to worry that we'll see gasoline prices in excess of $4.25 by summer (and many economists think this optimistic). Unsurprisingly, this will seriously hamper the recovery along with the president’s re-election efforts.
Most Americans wish for more alternative energy sources. In most our lifetimes, this remains a fanciful dream that fuels nothing but political rhetoric. The highly touted electric car revolution, if it recovers from the Chevy Volt debacle, is a prime example. Electric cars are not powered by some environmentally benign, clean ether. They run on coal.
The same marketing campaign that has convinced so many sweet young people that electric cars are 'clean' has also unleashed a torrent of stupid across policy advocacy circles. The truth is that if we could only increase our truly alternative energy output a hundredfold, we'd get close to 5 percent of our energy needs. No doubt, some new technology will emerge, permitting us to better store wind and electric power. But if this were here today (and it is not) it will still require three decades to install the transmission grid needed to move this power to where it is needed. The constraint is not one of political will or even funding (we have recently demonstrated the ability to print money). The constraint is simply that we haven't enough trees to support the power lines we need.
Obama also explained in his speech that authorizing drilling or building new pipelines will have no effect on current prices. He is quite correct. It will take perhaps three to five years before increased domestic drilling and new pipelines impact prices. This is a stunningly poor excuse for more delay.
Considerations about energy policy and the effect gasoline prices play on economic performance need to be wisely and thoughtfully balanced against potential damage to our environment. These are policy decisions to be made by those who win elections, which was what the speech was really about.
About the Author
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