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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

October 17, 2012 at 12:59 PM

The gas-price scam

Much gas was wasted in Tuesday night’s presidential debate over pump prices of $4 a gallon. Americans deserve better, we’re led to believe, particularly by Gov. Romney? Why? If Americans choose to drive long distances in single-occupancy automobile trips, choose to live far out, without choices of transit, this is exactly what we deserve.

Oil is a global commodity whose price moves in response to supply and demand. Democrats are particularly dense here because they believe there is some evil speculator troll keeping prices “high.” Or the oil companies are “evil” because they make big profits. Yet in most instances prices move with market forces and expectations. Prices were low four years ago because the world economy was entering the worst freefall since the Great Depression. They are higher now because the global and American economies are healthier. We’re bidding against the world. The miracle of the price mechanism is that we can pay enough to get the gasoline to the pump.

We face a higher-cost energy future. Much or most of the inexpensive-to-refine “light sweet” oil has been extracted and burned into the atmosphere. This caused a moment in history that gave birth to happy motoring and suburbia. It’s over. Now there’s a global race on to lock up fossil fuel supplies for the future, bringing with it geopolitical instability. Most of these supplies will be more costly. The reason Bakken or Alberta is viable is because energy costs are rising. The price mechanism, again.

This is happening whether we wish it or not. So are the heavy environmental costs of fossil fuel extraction and use, including fracking for natural gas. And do we have “a hundred year supply of natural gas,” as President Obama has said. Only if prices rise so high that they keep much of that gas in the ground. A couple of Oil Patch facts: Gas wells play out much faster than oil, and much of the natural gas “boom” has been a real-estate bubble of buying and selling leases. Federal land? Big Oil has some 7,000 leases it’s not even using.

Nobody has asked the most important question: What are you proposing to do about human-caused climate change, which is happening faster and more severely than scientists feared? Sure, it’s a political loser. But it should be asked. Along with, what intelligent responses can be made? Surely trying to burn up as much of the fossil fuels still in the ground is not among them. Most Americans don’t want the truth. It’s enough to drive a person crazy.

And Don’t Miss: Don’t pity the rich; the Great Recession was worst on the poor || The Atlantic

Today’s Econ Haiku:

The tanker-boom boom?

Fuel for the economy

If they build the thing

Comments | More in Energy, Oil prices


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