The price of gas, like all things retail, is the product of supply and demand. When demand is high -- i.e., a good or recovering economy -- the price is high. But when demand is low -- i.e., a Bush-style global economic meltdown -- the price of gas is low. It's not just consumers at the pump that drive the demand for oil, but consumers everywhere in the retail chain. Those Fritos don't climb up on the shelf all on their own, you know. When you start buying more of pretty much anything, you're increasing demand for oil. Goods travel.
It's hard to argue that rising gas prices are a good thing, but they are a good sign. And that's a difficult argument to make. Which probably explains why President Obama didn't make it when he was speaking about energy yesterday.
But the truth is that, even if we could somehow sustain a static, unchanging economy where the needle on the demand meter never so much as quivered, the price of gas would never go down. Ever. It would only rise. Again, it's supply and demand. Supply is shrinking. If you doubt that, consider the XL pipeline and the Canadian tar sands. We're now so desperate for oil that we'll literally squeeze it out of rocks. This isn't the sort of thing you do when there's plenty of the stuff lying around. The Oil Age is winding down, whether we want it to or not
All of which makes what the president calls an "all-of-the-above" approach to energy production seem pretty sensible. We're kicking the oil habit, whether we like it or not. "Anybody who tells you we can drill our way out of this problem doesn’t know what they’re talking about, or just isn’t telling you the truth," Obama told a crowd at the University of Miami. I'd like to see "all-of-the-above" with even less emphasis on drilling, but you take what you can get.
Needless to say, this isn't very popular with Republicans. It deals with reality and they hate that.
Gas prices did not figure prominently in the Republican debate on Wednesday in Arizona, where the candidates trained most of their fire on one another. But Republicans in Congress criticized Mr. Obama for not opening more federal land to exploration, and for not approving the Keystone XL pipeline.
“The president would like everyone to forget that gas prices have doubled over the past three years while he consistently blocked and slowed the production of American-made energy,” a spokesman for House Speaker John A. Boehner, Brendan Buck, said in a statement.
Any environmentalist will tell you this just isn't true, as a Wall Street Journal graphic illustrates:
If Barack Obama has "consistently blocked and slowed the production of American-made energy," he's been hopelessly incompetent in his secret plan to halt oil production. And, with all that new production, the price of gas continues to rise -- you could double it and it'd still rise. We can't produce enough to make a dent and the rest of the world is running out.
No, there's only one way to bring gas prices down significantly. The Republican way -- through a global recession. I'm not a fan of that option.
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