I'm as angry as the rest of you. I filled the tank on the family minivan this morning: $85.
CNN asks why gas prices are high and gives some nice explanations:
- 2004: Demand pressure
- 2005: Katrina
- 2006: Mideast political instability
- 2007: Lack of non-Opec production
- 2008: Speculative bubble
Not unreasonable, but I just want to make two points...
There's no mention of the long-term price trend. The graph to the right gives the 6 year monthly average for U.S. gas from gasbuddy.com. There is a distinct upward trend in prices since 2002 (and even further back, but the gasbuddy data doesn't go back any further). The moments of panic--Fall 2005, Spring 2006, Spring 2007, Spring 2008 all have simple explanations--Katrina, Spring, Spring and Spring (The demand for gas increases in the Spring due to more driving). But those are just fluctuations around a longer noticeably upward trend in prices--just as economic models of of a depletable natural resource predict. Scarcity causes higher prices, and that's a good thing. Higher gas prices lead to conservation on the part of consumers, exploration on the part of producers, and innovation on the part of alternative energy entrepreneurs.- The real question CNN should ask is: What can you do about $4 gas? There is only one answer. "Drive Less". You as a consumer have control over your own gas purchases and little over the market price. The choice to drive less may be uncomfortable, but all the whining, crying and shouting for the government to do something will only make the situation worse. Price controls, gas rationing, windfall profit taxes, gas tax holidays...are all bad policies that may make you (and politicians) happier in the short run but will make everyone miserable in the long run. Your solution to high gas prices is to adapt. Drive Less! If the market adjusts, all the better, you're saving even more money.
