Sushi Money

     I’ll admit it… I’m tired of paying so much for fuel for the car.  What are you paying for gas these days?  We hit $2.90 to $3.15 in our area yesterday.  The cost of filling up the tank is really influencing our habits, shopping decisions, and the desire to drive our cars, and it’s very frustrating.  The cost to school districts and transportation companies for their diesel buses must be astronomical at these levels.  Equally the overland cost of transportation for the big rig companies and airlines.  Grocery prices have been rising this year for a host of reasons, and the transportation costs involved are going to continue being passed on to consumers.  Investor’s Business Daily wrote an editorial yesterday with a stark look at our present reality, An Energy Crisis of Our Own Making:

“Want to bring [fuel] prices down? The real problem behind soaring oil prices — a lack of supply — hasn’t been addressed at all. Today we have what economists call a “demand shock.” It’s a result of the greatest global economic boom in history — a result of more poor people in more countries being pulled out of poverty than ever, thanks to fast-growing economies and free trade.”

      The article talks about how so many of us, especially the political leaders, are all wrappred up in global warming rhetoric, and that it’s not doing much to help us deal with the economic costs of the lack of oil or high oil prices.   Can you imagine the inflationary costs and the impact on consumer spending if this continues for a great length of time?   I understand this will push us faster towards alternative technologies, more efficient cars, etc.  But at what cost to society?  Just think of the economic costs of the lack of oil, and the excess money going to pay for $90+ per barrel oil.  That money comes from everyone’s pockets, especially the government.  And that comes back around from our pockets too of course.   A case could be made for how much money is lost for good, or alternative causes, because we’re stuck paying for $90+ barrels of oil.  If we had more production and more supply, and $40-$60 per barrel of oil, those dollars could go a lot further across the economic spectrum.

     Think of the social programs that federal, state and local government could fund if they were not paying such high prices for fuel.  Think of the charitable causes a family- even our family might be able to fund if we didn’t have to spend so much on fuel costs.  Think of the consumer spending and opportunity costs invoved because fuel prices are so dang high.  Maybe that’s what frustrates me the most… it seems like such a waste of money to pay such high fuel prices when we could be paying less with more production. 

     In our family, we’ve had a little 3-cylinder car since 1999 that gets 45 mpg.  No air conditioning and not very comfortable… but we drive it quite a bit to save fuel costs.  It’s a Chevy Metro, formerly known as the Geo.  The manufacturer stopped making them around 2002 because they weren’t making enough money apparently, and people would pay more for nicer vehicles regardless of mileage. We love that little Metro for the utility it represents, and the sheer savings on fuel costs.

      Now we have the Smart Fortwo  coming out in 2008 in the U.S.  A cool little vehicle that proposes to get around 40+ mpg. 

     Not much better than our Metro, but it’s probably a lot nicer inside and out.  Sounds a lot safer too!  But I’ll still take the little Metro for now.  I think we paid all of $7200 for it in 1999 and it just runs and runs.  U.S. manufacturers are going to need to continue producing much more efficient vehicles- it’s in everyone’s economic interest.  But it’s still not going to solve the supply versus demand side of the equation unless we produce a lot more oil.

“As the chart shows, our failure to replace our depleted domestic oil reserves has left us with a serious mismatch of supply and demand. We use more oil each year, but supply less of it ourselves.  That makes us vulnerable. We send hundreds of billions of dollars overseas each year to the Middle East, Africa and South America, helping fund terrorism and prop up some nasty regimes.”  

     “As Sterling Burnett, a senior fellow at the National Center for Policy Analysis, notes, if we had started drilling in the Arctic National Wildlife Refuge in 1995 — when President Clinton nixed the idea — we’d be pumping millions more barrels today. Ditto if we had more vigorously pursued our offshore reserves.”

     The next few years will be very interesting.  I wonder if the public will reach a point of being fed up?  Or do we just accept the fact of paying higher fuel prices permanently?  I can’t help but wonder if, after we’re well on the road to alternative energy use, and global warming becomes a household name with children’s books telling all about it… what if oil prices are still just as high or higher and we still have high demand?  What if the only thing that will reduce oil prices, and the cost to society for the next 10-20 years is more production?   Will we ever get there?  Maybe someone will invent a killer new technology that will negate the need for oil all together.  That would change everything.

No comment - Post a comment

« That’s It… I’m Giving Up on Chinese Products | Economic Perception and Self Interest »