High gas prices top U.S. voters' fears: Any relief in sight?

The Associated Press

Even the wealthy are feeling the pinch of $4 a gallon gas.

Featured Topic | Posted 30 weeks 5 days ago

High gas prices top U.S. voters' fears: Any relief in sight?

Paying for gasoline easily tops the list of economic woes facing families in the United States, according to a survey on how changes in the economy have affected people's lives. About 44 percent of survey participants said paying for gasoline was a "serious problem" for them. Across all income levels, the cost of gas was the most frequently cited economic concern. The price of gas nationally averaged $3.60 a gallon on Monday, according to the Energy Department.

More than a quarter of households earning more than $75,000 a year described paying for gasoline as a serious problem. For those with incomes of less than $30,000, about 63 percent felt that way.

Each of the presidential candidates has a plan to address rising gas prices. John McCain and Hillary Clinton both support the idea of a gax tax holiday over the summer, while Barack Obama opposes the tax break and advocates more alternative energy research.

Can politicians deliver long-term relief for rising gas prices? And what, if anything, should government do about energy costs?

Ben likes: Peak oil panic

Irwin Stelzer/Weekly Standard

In America, drivers are fuming and politicians are demanding explanations because gasoline has hit about $3.50 per gallon. That's less than half the price being paid by motorists in most industrialized countries. High to us is low to them. Then there are the oil refiners. Relative to the $120 price of crude, $3.50 for gasoline is so cheap that their margins have virtually disappeared. So "high" in Cambridge, Massachusetts and Oxford, Mississippi is "low" in similarly named cities in the UK, and "high" for motorists is "low" for refiners. It depends where you live, and at which point in the supply chain you find yourself.

But assume that prices are "high", which indeed they are by historic standards. We are mistaken when we think these "high" prices are causing inflation. High oil prices can force consumers to spend more on gasoline and heating oil, at the expense of other purchases. Ask any suffering restaurateur or clothes retailer if you doubt that. But high oil prices can't trigger a rise in the general price level -- inflation -- unless someone pumps money into the economy so that, to use an oldie but goodie from the economists' lexicon, there is more money chasing the same amount of goods.

If you want something to blame for inflation, don't look at oil prices, look at the billions the Federal Reserve Board's monetary policy gurus and their confederates at the U.S. Treasury are pouring into the economic system. The cost to taxpayers of saving the financial services sector from ruin is not only making good any collateral the Fed has accepted that might prove worthless, but the run-up in the rate of inflation.

Joel likes: No gasoline and no solutions

Tim Haab/Environmental Economics

High gas prices are not an economic or political problem. They are the result of the natural workings of markets. There is nothing wrong with the market -- and no reason, other than self-preservation and the false appearance of being able to do something, for politicians to intervene. Supplies are decreasing -- both temporarily through unexpected refinery shut-downs and permanently through stock depletion.

Demand is increasing -- both in the U.S. and worldwide. Both of these will cause gas prices to rise and that's good. If gas prices don't rise, we will consume gas even faster and run out sooner. Higher gas prices encourage conservation and encourage investment in alternatives. High gas prices might be uncomfortable while we search for viable long-term solutions, but they're more comfortable than the alternative: no gas and no solutions.

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Demand $2 a Gallon Gas

Submitted on May 13th, 2008 by Anonymous

Oil was $120 a barrel on May 5, 2008.

The cost of a barrel of synthetic fuel from coal is estimated to be $55, including the infrastructure and labor force necessary to operate plants.

Germany fueled WWII with synfuel from coal. It is proven technology.

America has 1/3rd of the coal on Earth and can eliminate dependence on foreign oil.

Reducing America’s trade imbalance keeps money and jobs here in America.

Every billion in trade deficit costs 13,000 American jobs. $400 billion for oil last year: you do the math.

And we can stop sending billions to countries that sponsor terrorism.

Synfuels are cleaner burning than gasoline and carbon sequestration can remove CO2.

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Harness your anger at the pump. Call you're US Senators and demand they break ground on America's energy independence by encouraging an American synfuel industry in this decade.

If you don’t raise your voice the oil companies, lobbyist and politicians will assume you are fat, dumb and happy and ready to pay even more.

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Submitted on May 4th, 2008 by Anonymous

where does Obama get off saying this would only save 30 cents a day? Most of us folks don't live downtown Chicago and have to drive 40 or 50 miles a day just to get to work. Then whatever extra that you might drive goes on top of that. But at only 50 miles a day that is a lot more than Obama says. 9.50 is a lot more than 30 cents. Where is his common sense? But I guess he doesn't have to figure anything. Some of us do.

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The myth of peak oil

Submitted on May 1st, 2008 by Anonymous

Peak oil theory only accounts for the easy, $3.00/barrel oil.
Yes, the easy oil has been tapped. No, we are not running out of oil. Check out the "new" discovery of 3.65 billion barrels in the "Bakken", which stretches across North Dakota, Montana and southeastern Saskatchewan, and is the largest oil find in US history. This single handedly blows apart the Hubbert Curve/peak oil theory. But this oil has been known for over 50 years. What's "new" is the dramatic revolution in oil recovery we have seen in just the last 10 years -using supercomputers and seismic equipment to find oil, breakthroughs like horizontal drilling and new extraction methods.
The USGS points out that since 1995 our discovery/recovery methods have increased the amount of RECOVERABLE oil by a factor of 25. Now apply that 25X to all the existing oil wells in the USA, and all the known oil that has been too expensive to get to. Michigan, it's been said, has more oil than Texas- but it's been too expensive to go after- until now. Add in the other 31 oil producing states, and you get the picture.
As long as oil stays above $35/barrel, people will find a lot more oil.

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Mr. Stelzer is oil-ignorant

Submitted on April 30th, 2008 by Anonymous

Mr. Stelzer may be an economics writer, but he doesn't understand the oil business or geology. Essentially all reputable oil geologists who follow the oil supply statistics agree - we are at or near the condition of "peak oil", the state at which we have gone through about half of our planet's oil supply. The US passed this point in 1970. Almost all of the large oil fields have passed this point (Iraq and Nigeria have not, due to political turmoil). Discovery of new oil fields peaked almost 30 years ago - unless you discover, you can't extract. What new finds are being made are in areas difficult to drill (arctic or deep water) and/or politically unfavorable. Using so-called oil sands or oil shale doesn't solve the problem. The extraction requires massive amounts of heat (typically generated with natural gas) and water (in regions where it is in short supply). The most optimistic estimates of extraction rates still don't make a dent in the supply gap now appearing in the world liquid fossil fuel markets.
It's time to move on to the next generation of fuels and conserve the rest of the liquid oil for those things we make with it and have not found substitutes for.

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