Image via WikipediaThis morning I got into my car and headed off to work. Earlier this month, it was reported that gasoline prices had hit their highest retail price for early February ever, even higher than the record prices we saw a couple years ago. There is one gasoline station that I pass on my way to get a gauge of what gas is selling for. At the time the report was released, gas at that station was running around $2.99 per gallon. Over the weekend it sat at $3.05 per gallon. Today, it was up to $3.15 per gallon, up 3% in the past week.
The unrest in the Middle East over the last couple weeks has led to some of the recent increase to be sure. However that is only part of the problem. The Heritage Foundation has a great post on their Foundry blog that details 10 things you need to know about high gas prices and Obama's oil policy. It makes for some very interesting reading. Now, I am not going to lay all the blame for the current price of gasoline strictly at the feet of the Obama administration, but they sure as hell aren't doing anything to help the situation.
Every President since Carter has talked about our need to reduce our dependence on foreign oil. There are huge oil reserves off our coastlines and in Alaska. Unfortunately, since Carter, we have been hamstrung from developing our domestic sources of oil by giving in to the environmentalists. Every time we do get a President to be willing to start the process of developing those domestic resources, we have to face the roadblocks of the environmentalists. It takes so much time to get approval to drill, that by the time they can get started, a new administration comes in and shuts things down again.
There is a rather simple law of economics that takes place with oil and gasoline. Prices go up when either demand increases or supply decreases. Likewise, prices will go down when supply increases or demand decreases. With the unrest throughout the Middle East, there are real concerns about the supply of oil being interrupted which will send prices up even higher. Couple that with increased demand from other countries like China and Russia which is exerting even more upward pressure on oil prices. Developing our domestic sources of oil would increase supply and ease pressure on prices.
I can hear all the environmentalists squawking about how we can't drill. The reality of it is that for the most part, drilling has been fairly safe with very few environmental disasters, the BP Gulf spill notwithstanding. And I don't want to hear about the poor polar bear. Their populations have been growing, and they sure as hell don't care about what happens to us. In fact, they would just as soon tear your head off as look at you. If the polar bear wants to get in the way of drilling, I say drill through their ass.
Now don't get me wrong. I am all for developing cleaner energy sources. I am also in favor of more fuel efficient automobiles. The reality is that oil helps drive the economic engine as well as our combustion engines. Higher oil prices will impact all aspects of our economy which is struggling with high unemployment and slow growth. With the government spending at a deficit rate in the trillions, we need revenue. Ironically, as pointed out in the Heritage post, due to the administration's oil policy, the government is losing billions in revenue from royalties for oil production.