What is up with the price of gas?
By C. Marcus Parr
Who’s responsible for rising gas prices?
Asking this question makes sense when we’re paying so much to fill the tank. Seven years ago, the price for a barrel of crude oil was $30. It recently reached a high of $137. Oil not merely doubled or tripled in price during President Bush’s administration, but more than quintupled.
In all fairness, the staggering cost of gasoline cannot be laid solely at the feet of George W. Bush. Several factors are at play the falling value of the U.S. dollar, a diminishing supply (or scarcity) of oil versus rising demand, and speculators in the futures market.
The dollar has lost about 60 percent of its value against the euro over the last seven years. It has lost even more value against gold and petroleum. When the dollar drops in value against foreign currency, Americans pay more for a barrel of oil on the international market.
Alternatively, when speculators set oil futures at $130 a barrel, we pay more at the pump and the United States trade deficit increases. Our annual oil import bill has risen from $106 billion in 2006 to approximately $500 billion today.
Are speculators at the root of this problem? According to T. Boone Pickens, legendary Texas oilman, the futures market is not a ‘bubble’ about to burst. Oil futures are rising because of scarcity and high demand, not speculation. George Soros, the hedge fund billionaire, counters Pickens’ argument by saying the global oil price explosion is caused by commodity futures speculation. He believes that speculation is exaggerating the true price of oil.
Are we running out of oil? Some say we’ve already passed Peak Oil. Finding and extracting crude has become difficult for oil companies. Today, worldwide demand for oil is outpacing production.
No matter which view is right or who is at fault, the world economy runs on gasoline and we’re burning it faster than we can pump it out of the ground.
We need to reduce our energy consumption through conservation. This is a good policy for our pocketbooks and the environment. Commute with others. Use mass transit. We have a marvelous bus system in Sandy: Fareless SAM. It’s clean, it’s safe and it’s free!
Save energy by making your home more energy-efficient: insulate, put in new windows or passive solar systems and buy energy-friendly appliances. We need to buy local produce and goods rather than imported goods. Many of us already have vegetable gardens or shop at local farmers’ markets. Yes, it’s true that conservation will take a major change in the way we live, but these habits will pump money into our local economy, help conserve energy and help build a sustainable community.
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