Gas prices

Gas prices have gone up in the last week or so. Our representatives in Congress have heard constituent complaints and reached for their handy playbook. The political playbook says when a large segment of the population is in agreement on an issue the best thing to do is to pander to them and to pretend to empathize. The next step is to talk about passing some legislation to change things (or at least punish the alleged culprit). Most important thing is to avoid mirrors as they would hate to recognize any personal responsibility for the results of past legislation.

Politicians from both political parties have played that game over the last few days. They demagogued the issue and demonized the oil companies. They have threatened to pass windfall profit taxes. They have refused to accept any responsibility for past legislation which affected the supply and refining of crude oil.

Worst part of this situation is they know better. If they attended and passed a junior high economics course, they realize it is a supply and demand problem. However, when discussing a consumable commodity like oil we must remember it is the perception of future supply which really drives the price of crude oil. There have been about a half dozen geo-political events in recent weeks which affect that perception. Unrest in Nigeria. Iran's president is a nut who has talked about removing Israel from the map. Iran is working on developing a nuclear arsenal (refer to last item). Venezuela's dictator is also nutty and he has talked about halting the sale of oil to the United States. A large portion of the worlds oil supply comes out of the Persian Gulf. For a tanker to exit the Persian Gulf it must transit the Strait of Hormuz. An angry Iran could fairly easily shut down the Strait of Hormuz.

What has Congress (and some state governments) done in the past?
1. They have passed onerous environmental regulations.
2. They have continued to ban exploration in ANWR and other areas.
3. They have assessed heavy taxes on oil and gasoline.

Reasonable people can debate the merits of each action or inaction, but there is no denying their impact on the price of gasoline. More of the same will only make the situation worse.

Any senator (Specter, Levin, etc) who proposes more taxes as a way to lower gas prices should not only be drummed out of elective office but should also have their high school diploma (if they got one) revoked. I'm not an economics genius but even I know that adding taxes has never lowered the price of anything.

I'll admit that none of us know how much oil is to be found in ANWR and once it is opened to exploration it is years away from being added to the available supply. However, every time the senate votes against the exploration they are further delaying the arrival of that oil. More important than the actual arrival of the oil is that authorizing exploration of ANWR will change the perception of future oil availability. When you go to vote in the upcoming primary election (and in November's general election) make sure you know how the candidates would vote on ANWR. In Ohio's senate race the incumbent, Sen. Mike DeWine (Rino-OH) voted against ANWR and for higher gasoline. DeWine's only serious challenger, Bill Pierce, has said he would have voted for ANWR exploration.

As consumers our only recourse is to change the demand portion of the equation. As the price hits new highs people will over time adjust their driving habits. To do my part, I'm vowing no more trips to the in-laws until gas is back under $2.