Tuesday, April 25, 2006

Pointless political posturing

W (Duhbya) made some moves today designed to help us little folks buy cheaper gas. Unfortunately, what he tried was way too little, and way too late.
  1. W gave the Environmental Protection Agency the authority to relax regional clean-fuel standards to attract more imports of gasoline to the United States and to make it easier for supplies to be moved from one state to another.
  2. W halted deposits of oil to the nation's strategic petroleum reserve until the fall.
Number 1 means we get to breath even dirtier air for slightly cheaper gas. Wow. What a choice. Number 2 doesn't mean squat. What are some of the real reasons for higher gas? Let's count them.
  1. The global economy is expanding, and that means the thirst for oil is only going to grow.
  2. Daily global demand is roughly 85 million barrels per day. There is less than 2 million barrels per day of spare production capacity.
  3. Oil traders are nervous about geopolitical tensions in Nigeria, Iran, and Venezuela.
  4. Speculative investors are piling into energy markets.
Numbers 1 and 2 fit hand-in-glove. The drivers in the global economy are China, India, the U.S., and just about everyone else. In fact there's a positive feedback loop in which the money flowing in to poorer countries such as Nigeria and Venezuela will feed their economies further, driving their desires for the same resource-intensive consumer goods that everyone else is gobbling down at unsustainable rates. Numbers 3 and 4 fit together quite nicely, too. They either feed off of each other or they are one and the same individual. The quite nasty problem with speculation and a resultant bubble in the energy markets is that we all suffer before there is a correction.

This cost of energy is only going to get a lot worse for a long time. We need to loose our dependence on oil and gas to generate our energy. And as much as it's going to hurt me, if rising gas prices will drive the big SUVs and other gas guzzlers off the road, then I say let's get them prices up.

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