Higher Gas Prices Add to Economic Slump

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Courtesy of the Heritage Foundation:

Unemployment is at 8.3 percent. The economy is sputtering at 1.5 percent growth. Food prices are rising due to drought conditions across the country. And gas prices are up again, pinching Americans’ summer budgets. It is past time for the President and Congress to pursue smart policies that would put us on a path to relief.

According to AAA’s Fuel Gauge Report, the current national average for regular is $3.66 per gallon. That’s up 28 cents per gallon from a month ago, and July had its biggest price jump since AAA started tracking prices in 2000. To see the average for Florida click here.

There are many factors affecting prices that we cannot control—worldwide tensions, especially in the Middle East, can drive up oil prices. Global demand, especially from China and India’s rapidly growing economies, continues upward.

But after three years of adding regulatory hurdles and blocking exploratory access and development, President Obama’s policies are helping keep prices higher than necessary.

If the President truly wanted to lower gas prices, he would work to increase supply. But when given the opportunity, he has done the opposite. He turned down the Keystone XL pipeline, which would bring up to 830,000 barrels of oil per day from Canada. His Administration has made it even harder for companies to explore and extract domestic energy resources by canceling, delaying, or withdrawing a number of lease sales for exploration and development. Meanwhile, huge swaths of federal lands have been put off limits for energy exploration.

Domestic refinery outages have had a recent impact on gas prices. Two of the factors holding back domestic energy production are regulatory red tape and litigation—and these, we can do something about. As Heritage’s Nicolas Loris notes:

Environmental activists delay new energy projects by filing endless administrative appeals and lawsuits. Creating a manageable time frame for permitting and for groups or individuals to contest energy plans would keep potentially cost-effective ventures from being tied up for years in litigation while allowing the public and interested parties to voice opposition or support for these projects.

We don’t have to stand still. Congress could alleviate the energy crunch in 10 different ways by taking action on things we can control, like restrictions on oil shale development and offshore drilling.

One of the most common objections is that increasing domestic oil production takes too long and would not impact the market for at least a decade. The longer people make this argument, however, the longer it will take. The sooner we make investments in domestic energy, the sooner those benefits will be realized. And with some serious reforms, some of this oil can reach the market in much less than a decade.

Gas prices aren’t under the control of any one President. But Americans shouldn’t settle for policies that restrict oil exploration, refining, and production and artificially drive prices higher.

MORE FROM THE HERITAGE FOUNDATION:

High Gas Prices: Obama’s Half-Truths vs. Reality

President Obama’s 10 Worst Energy Policies

Republicans and Democrats Alike Want Higher Food, Fuel and Energy Prices

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Gallup Politics recently did an Environmental poll (see the below chart). The results shows that a majority of Republicans and super majority of Democrats favor actions that will lead to higher food, fuel and energy prices. While there are more Republicans that favor opening public lands to exploration and drilling the end results of their support for policies like increasing regulations to reduce “emissions and pollution standards for businesses” means higher costs for all consumers.

Americans polled may not understand the difference between “emissions” and “pollution”.

Emissions/greenhouse gasses, e.g. CO2, primarily occur due to water evaporation from the earth’s oceans and seas. When 50% of Republicans want government to “impose mandatory controls on carbon dioxide emissions” many consumers wonder if they understand that we cannot control water evaporation from happening. The EPA recently issued a CO2 emissions ruling that impacts all of U.S. coal fired plants and will cause many to shut down because they cannot meet the new standards. This will drive up energy costs and thereby food costs.

Government spending on solar and wind power has been a disaster with many of the companies failing to produce a cost effective product, moving their operations to China or going bankrupt. All of these companies are a further drain on our economy because they are not producing cheap and reliable power, they are producing just the opposite, which drives up energy costs and thereby food costs.

While Republicans generally favor opening public lands to oil, natural gas and oil shale exploration and production, nearly half want stronger enforcement of environmental regulations and higher emission standards for automobiles. One negates the other.

The environmentalists are licking their lips at these numbers.

The pollster’s state:

Gallup has tracked seven of the eight proposals periodically since 2001. Support for all but nuclear energy has declined since last measured in 2007, with the largest drops seen for spending government money to develop alternative sources of fuel for automobiles, strengthening enforcement of environmental regulations, and setting higher auto emissions standards.

These declines could be due to Americans’ reduced priority in the last several years for preserving the environment at the expense of economic growth, an outgrowth of the economic downturn. However, they are also likely to stem from heightened public concern about government spending and regulations specifically, particularly among Republicans.

Some do not find these numbers low enough to keep Republicans, in an election year, from stopping the power grab by the EPA. If this is a campaign issue then the consumer loses. As food, fuel and energy prices rise so will inflation. The column “Our Bubble Government” notes that inflation will burst both the dollar and debt bubbles. The higher the cost of goods and borrowing the more likely the current recession will last or deepen.

From this Gallup Environment poll some see trouble brewing on the horizon and its name is – inflation.

RELATED COLUMNS:

Global Warnings Reckless Rhetoric

Overthrowing Environmentalism

Obama’s Eco Lies

The Fallacy of Energy Efficiency

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Across the world there is a concerted effort to reduce the use of energy via efficiency. This has grown into a political ideology dedicated to saving the planet by reducing each of our carbon footprints. For example, governments mandate CAFÉ standards to increase fuel efficiency. But what have been the actual results of these efforts?

Today we build engines that propel our aircraft, ships, trains and cars using much less fuel. However, to the chagrin of many who want to save the planet, as efficiency has increased so has the demand for more energy, particularly fossil fuels.

For example in Florida the state legislature has gone so far as to create a pilot program to create two Energy Economic Zones, one in the City of Miami and the other in Sarasota County, Florida. But to what avail? History tells us as we create greater efficiencies we then consume even more. But why does this happen?

In 2003 the Norwegian Institute for Consumer Research did a study titled The Fallacies of Energy Efficiency: The Rebound Effect? The study reports, “It has been observed that energy efficiency measures result in less than expected energy savings. This is usually ascribed to the so-called rebound effect . . . If you buy an appliance that is twice as efficient as your old one, the effective price of fuel is reduced to a half. As long as the elasticity of energy demand with respect to energy price is not zero, as would be quite unreasonable, there will be a pressure on energy demand.”

Remember: The elasticity of energy demand will never be zero.

In his Wall Street Journal column It’s Too Easy Being Green, David Owen laments, “A favorite trick of people who consider themselves friends of the environment is reframing luxury consumption preferences as gifts to humanity . . . Our capacity for self-deception can be breathtaking.”

Owen, as an environmentalist, notes, “Even when we act with what we believe to be the best intentions, our efforts are often at cross-purposes with our goals. Increasing the efficiency of lighting encourages us to illuminate more.” David is describing the Rebound Effect.
Efficiency is good. Efficiency makes available more goods and services to more people. As more people can afford an automobile because of manufacturing efficiencies the better for us all. That is what David realizes as he concludes his column. David states, “Relieving traffic congestion reduces the appeal of public transportation and fuels the growth of suburban sprawl. A robust market for ethanol exacerbates global hunger by diverting cropland from the production of food.”

Energy efficiencies lead to greater energy demand. Concepts like Economic Energy Zones, locavorism (only eating food that is produced locally), sustainable communities, electric cars, high speed rail, public transportation, green buildings, CAFÉ standards and alternative fuels are “breathtaking self-deceptions”.

As mankind finds better and cheaper ways to make things and provide services the broader will be the market as consumers like saving a buck. That is what drives us all. Getting more for less and as we can do we do more for less.

Man works in his own self-interests. That is called individualism. That will never change.

As Ronald Reagan once said, “Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefiting from their success — only then can societies remain economically alive, dynamic, prosperous, progressive and free.”

Attached file:

Fallacy of Energy Efficiency