Opinion
Falling gas prices a curse in disguise
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Yesterday, while filling up my gas tank for under $2 per gallon for the first time since high school, my feelings of nostalgia were overcome only by the jubilant realization that by spending merely $25 to fill up my tank, I’d have plenty of money left over to spend on other liquid substances. However, this initial excitement subsided when my always inquisitive nature realized that such a bargain must be too good to be true.
Yesterday also marked the 60th straight day of a decline in gas prices, dropping to a national average of $2.105 a gallon from an astonishing $4.114 on July 17. Crude oil prices have dropped 60 percent since July 11, from $147 a barrel to a miniscule $57 dollars a barrel. And, according to an article by the New York Times, each 10-cent drop in gas prices gives an extra $12 billion back to the consumer. So how could this be a problem? To understand how it is, we must focus on the reaction of the American people earlier this year when gas prices were shattering records on a daily basis: We panicked and demanded solutions. In doing so, we nominated two presidential candidates who not only believed in the human effect on global climate change but who were committed to solving it through a market-based approach that would couple environmental responsibility with economic innovation.
However, besides affecting the American attitude towards the economic crisis, the drop in gas and oil prices have had a stronger effect in quelling the possibility for development of alternative energy sources. The notion of “drill, baby, drill” was rightfully regarded by our nation’s experts as not being the most advantageous approach to American energy policy. Not only would such drilling continue to harm the environment but it would delay the arrival of a once-in-a-generation economic opportunity. Thus, the most effective way in which to solve the current energy problems was seen as research and development of alternative renewable energy, if not for the environmental opportunities so much as the economic ones.
The problem, however, is not just that low gas prices quiet the public demand for renewable energy, which they do, but that low gas prices make production of renewable energies economically difficult.
One pertinent example is billionaire oil tycoon T. Boone Pickens, who promised to begin development on the largest wind farm in the world. In July of this year, the Pickens Plan was announced with full support of many of our nation’s leaders, but in November the project is facing enormous challenges. As Mr. Pickens puts it, “With natural gas prices where they are, you can’t kick off a wind project, you’re not economical.” In July, when natural gas was costing the consumer $12 per million BTU, which claimed claimed to reduce by 43 percent, the amount of money our country spends on foreign oil, was feasible. At minimum to be profitable, the cost should hover somewhere around $9 per million BTU, but currently the costs have dropped to $6 per million BTU, eliminating any current chances of success.
While forecasters are predicting a slight rise in fuel costs next year, they will not average out at the levels seen this summer. Intuitively this seems beneficial, in reality, however, it is not; we will benefit most when gas prices surpass the cost of investment in alternative energy production and its eventual consumption. While high gas prices certainly limit opportunities for many hard-working people, they are a necessity in our challenge to get ourselves away from oil, especially from foreign sources. The benefits of the production of alternative fuels are so numerous that to not take advantage of their benefits at an early stage would be detrimental to the future of our country. We face an opportunity to invest in an economic opportunity that can give birth to a new rise in American innovation and economic prosperity, to end our dependence on nations that violate rights we take for granted, as well as limit our contributions to the damaging effects of climate change. So, if the government is unable to adequately incentivize development of renewable energies, I will continue to look at gas prices and subconsciously hope “rise, baby, rise,” even though, like most of us, I’ll find it hard to complain about a little more money in my pocket.
Ben White (bwhite2@wisc.edu) is a senior majoring in political science.
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Falling gas prices are a result of only one thing, the end of speculation on gas prices. Since the stock market “crash” few people have been willing to speculate on the price and thus it fell. The high cost of gas was more related to greed and profit than it was EVER supply and demand
Come on, Ben, it’s pretty easy to understand all the economic upheaval taking place! It’s a money grab, plain and simple. By June of next year, everything will be back to normal. Unemployment will go down dramatically, homeowners will be able to buy homes just like the ones they lost, gas prices will stay at $2/gallon, Madison liberals will return to their evil militant extremist ways, it will be shameful to be a white heterosexual male once again, all your favorite 90’s sitcoms will be back on the air, Ellen Page will finally come out, aggressive panhandlers will once again lurk in every block of State Street, Paul Soglin will be our mayor again, The Packers won’t suck so much, Kyle Zsarzinski-or-however-you-spell-it will get all his front teeth knocked out when he gets drunk and picks the wrong lesbian to start a fight with…be positive, dude!! The world wasn’t created in a day, so it’s doubtful it’ll be wiped out in any less than a week.
Cheers!
We should tack on a $1 tax per gallon to go directly to Detroit’s auto makers.
We need R&D by people committed to finding new renewable sources of energy, not people raking in personal profits and bailing out of important projects that aren’t always financially profitable.
” The benefits of the production of alternative fuels…”
Would the “benefits” include riots over the increased cost of food?
Burning food isn’t such a good idea.
PS. The climate change to worry about is global cooling, not global warming.
“While high gas prices certainly limit opportunities for many hard-working people, they are a necessity in our challenge to get ourselves away from oil,…..”
Yeah, pity those hard working people having to decide whether to buy a $4 gallon of gas to get to work or $4 of rice and beans so they can have a least one meal a day. Those selfish rat bastards should just quit their poverty and hunger induced whining because political science majors want “alternative fuels”. And Poly Sci majors are authorities on alternate fuels economics! In solidarity with our no-experience president elect, Poly Sci majors are “prepared to Rule from Day One”! (ref. http://www.breitbart.tv/?p=217323, video, Meet The Press, Obama Spokeswoman Vallerie Jarret).
The US has coal reserves sufficient to meet our TOTAL energy needs for 100 years. It is the least expensive fuel available, bar none, and it is right here in the US. Our research dollars would best be spent enhancing the efficiency and cleanliness of coal combustion power plants and coal-to-liquid fuels (gas, jet fuel, home heating oil, etc)conversion plants, if freedom from foreign sources of oil is truly desired.
Nuclear fission power plants can generate their own fuels through breeder reactor facilities. They are a well understood and safe technology that France has used for the last 30 years to generate 70% of it’s total electical energy needs. Implementation within the US requires acceptance of a standard design and streamlining of construction permits to get this proven source of moderate cost power contributing significantly once again.
Low cost energy spurs economic opportunity for all Americans and all American businesses. The economic “pie” gets bigger and more people get their slice of the American Dream.
Conversely, high cost energy penalizes American business, cripples productivity and investment, and acts as a direct regressive tax on low income families. The economic “pie” gets smaller, economies go into recession, people get laid off, and more people become poor. The exceedingly high energy prices of the last 2 years triggered a world wide recession. But none of that seem to register with Poly Sci majors.
Belief in chimera such as Man Made Global Warming is worse than a tax. It diverts huge amounts of capital and human effort in quixotic attacks on problems that don’t exist. 32,000 American scientists have reviewed the UN-IPCC Global Warming Reports and supporting documentation and concluded “There is no convincing scientific evidence that human release of carbon dioxide, methane, or greenhouse gases is causing, or will cause in the foreseeable future, catastrophic heating of the earths atmosphere….” (Ref: The Glogal Warming Petition Project, http://www.petitionproject.org/ ).
That trumps empty rhetoric from a Poly Sci major any day…
Invictus Maneo
wow. get over yourself
SOme of these responses just represent the crazy backward soft liberall ass policies that Madisonians crave. The point is NOT that investing in alternatives will bring about a reversal of climate change; who cares if its human made or not, we’re not going to be able to actually do anything about it anyway. However, their is an economic opportunity in investing in alternative energies that makes it worthwhile. The world WILL stop using oil and if we want to stay on top we need to be in charge of the energy technology industry. So what if we have enough oil for 50 years? So we use it while other countries capatilize on the economic opportunuties of alternatives? We are handcuffing ourselves by still using oil; investing in our oil reserves is the equivalent of someone in 1990 telling everyone to “Invest in Typewriters!!” right before the computer age was born. We are in the beginning of an energy revolution and it would be in our best interest to lead it.
Man, I wish I were so cool that I could debunk climate change with pseudo-science under a pseudonym ALL OVER the website of a college newspaper. That would be a real constructive and respectful use of my time.
Thanks, Ben. You all but took the words out of my mouth, then made them much better.