I paid about $3.50 a gallon today for gas, a significant drop-off from last year at this time and well within the historical norms of the last two decades. I know this because I dug up a 15-year-old column on gas prices that pegged the price at the pump in summer of 2008 at $3.899 — eight years before Chris Christie signed a 23-cent state gas tax hike into law that, when taken into account, shows just how high gas prices had risen during the Bush administration.
But the actual price of gas misses the point. As Politifact points out, “The movement of gas prices doesn’t correlate with who’s in office. It’s determined by the balance of supply and demand, and influenced by the health of the economy and OPEC policies.”
Gas prices rose during the first year and a half of the Biden administration because Russia’s war in Ukraine disrupted gas supplies globally, further compromising a market already struggling to keep up with the demand unleashed as people went back to work at the end of the pandemic. The Gas price increase was part of a larger inflationary trend created by the war and the Covid-damaged global supply chain, which affected everything from parts shipments and computer components, to new cars, and food supplies.
What we were witnessing was not a failure of political leadership, but a deeper systemic failure at the heart of corporate capitalism, a system that chases profits and leaves a lot of damage in its wake. Markets, when left unchecked as they are in our corporate economy, create shortages and gluts.
The shortage of personal protective equipment during Covid is a case in point. It happened because big business failed to plan for such a health emergency, viewing PPE and other emergency equipment as too costly to stockpile. So, when the pandemic hit, local and state governments, medical facilities, doctors and nurses were left to scramble. The market corrected, but not quickly enough to prevent Covid from leaving death and illness in its wake.
Gas prices are no different — except that they are visible and present in our lives in ways that other goods might not be, and their increase elicits public anger, which in turn leads politicians to react (but rarely act). Gas tax holidays, new drilling, subsidies for oil companies. None of these would offer more than a short-term fix (if at all), and they would nothing to address our addiction to fossil fuels.
Here is the column:
DISPATCHES: It’s a gas, gas, gas
As I pulled into the service station Tuesday afternoon, I knew my bank account was in trouble.
My 20-gallon tank was as near empty as it could get and the $3.899-per-gallon price tag meant that I was facing a hefty bill.
I’m not alone in this, of course. The $72.76 I paid Tuesday has become a regular occurrence in the region, as the steep rise in gas prices have taken their toll on just about everyone.
The national average was $4.055 a gallon on Tuesday, according to AAA’s Daily Fuel Gauge Report, up $1.087 (a whopping 36.2 percent) since last July.
In central New Jersey, prices are averaging $3.959 — up from $2.809 last year. The disparity is due to the state’s lowest-in-the-nation gas tax and our proximity to oil refineries, which reduce our shipping costs.
But that doesn’t mean we’re not feeling the pinch.
President George W. Bush and Republican presidential candidate John McCain believe they have the answer. They want to open the nation’s coastal areas and the Alaska National Wildlife Refuge to oil exploration, saying the nation is desperately in need of new energy sources to wean ourselves from foreign oil. New sources will drive prices downward, making gasoline more affordable for all drivers.
Leave it to the president to play politics with energy policy. The drilling plan, which has support among voters, is one of those long-sought-after conservative goals that may sound good at a time of economic crisis but will aid few aside from the folks who run the oil companies — at least, not for another decade if ever.
According to an Associated Press report, the five largest oil companies “plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year” — money that essentially was handed back to investors and not used for oil exploration or to develop alternative fuels. That is nearly double the 30 percent handed out to investors in 2000 and astronomically higher than the 1 percent — yes, 1 percent — dished out in 1993.
This is happening at a time when the industry is “rolling in cash,” the AP reports. “The cash the biggest oil companies bring in from running their businesses, or operating cash flow, is four times what it was in the early 1990s.”
Just as importantly, “offshore oil exploration is slow and costly,” The San Francisco Chronicle reports.
Experts quoted by the paper on Tuesday said that were California’s coast opened to drilling immediately, “the first exploratory wells probably wouldn’t be drilled for at least six years” and “bringing newly discovered oil fields into full production would take longer.” Translation: New oil wouldn’t hit she the market until at least “midway through the next decade,” with consumers not seeing an impact at the pump until much later.
Drilling off the New Jersey coast is just as unlikely to make a dent. New Jersey Democrats, speaking at a July 7 press conference in Belmar, said the federal Environmental Protection Agency has estimated that drilling off the eastern coastline — in what is called the Mid-Atlantic Planning Area, which runs from Virginia to Delaware — was likely to produce no more than 41 days worth of oil.
The drilling plan, U.S. Sen. Robert Menendez, D-NJ, said at the press conference, unfortunately “doesn’t include a time machine that we can use to jump to the year 2017, when we might finally see the first drop of oil out of our coastline. They want to make it sound as if we can run a pipeline from the ocean floor straight into our gas tanks, but it’s really a plan that won’t have any effect on gas prices for a decade and even then will only amount to a handful of pennies.”
The problem is not supply — or not just supply. Demand also is an issue. Gasoline usage will continue to grow — not just in the United States, where we use far too much oil. Developing nations, like China and India, also are pushing international demand up faster than we can produce more oil, especially as we exhaust the more easily accessed reserves and are forced to delve into riskier terrain.
We can only boost the supply of oil so much without exacerbating already catastrophic climate problems, damaging our coasts and fouling our water and air. Alternative sources are needed — biofuels, wind, solar — though those are likely to be of limited effect.
We have to cut our demand — or, as Thomas Friedman put it in his Sunday New York Times column, “break our addiction to … dirty fuels” — by increasing our gas-mileage standards, encouraging walking-friendly communities and mass transit opportunities.
Even if this approach does not lead to lower gas prices, it will result in less gas used, reducing greenhouse gas emissions and lessening our dependence on foreign energy sources.
The problem, after all, is not just high gas prices, but an unsustainable lifestyle.