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 ([email protected]) is a senior majoring in political science.
