Why Don’t We Know the Truth Behind Gas Prices?

Posted on 24. Jun, 2008 by in Saving & Investing

If you google “reasons behind high gas prices” you’ll get about a thousand different answers. High state or federal taxes, supply, demand, OPEC, President Bush, oil companies, Wall Street speculation… the list goes on.

And to be quite honest, I’m not sure who to believe. The republicans are using the issue to push for more drilling. The democrats are using the issue to push for energy policy reform and investments in “clean tech.” But the truth is buried so far beneath politics, lies, and misdirection that it’s impossible for you and I to find the truth.

It’s not a blip, said Marilyn Brown, professor of energy policy at Georgia Tech, citing data showing surging transit ridership, dropping sales of sport-utility vehicles and sharply increased demand for gas-efficient vehicles. I think the difference between now and 1979, when prices were comparable when you adjust for inflation, is there’s a sense of sustained pain. There’s a sense that the era of cheap energy is a thing of the past.

However, as the prices have continued to climb it seems to have had an effect. USA Today is reporting that Americans drove 22 billion fewer miles from November through April than during the same period in 2006-07, the biggest such drop since the Iranian revolution led to gasoline supply shortages in 1979-80. The decline in total miles traveled, though only 1%, means that many drivers are cutting back far more because the number of drivers and vehicles grows by 1% to 2% a year.

But I suppose my question is: if we’re driving less and more people are buying fuel-efficient cars doesn’t that mean that demand for gas is lower? And if demand for gas is lower, should the market respond by decreasing prices? The fact that the market hasn’t kicked in makes me suspicious that other forces are at work here. And something tells me they’re working to make a buck from you and me.

No comments.

Leave a Reply