A Sure-Fire Remedy for High Gasoline Prices

As I write this at the end of March, the price of gasoline is in a firmly established trend upward and it is fast approaching a record high.

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As I write this at the end of March, the price of gasoline is in a firmly established trend upward and it is fast approaching a record high. Gasoline prices usually trend higher at this time of year as we head into the summer driving season. Refining capacity is tight, and the price of chemical additives that alleviate some of the environmental issues must also be included. Predictably, this has consumers, as well as analysts and politicians, uneasy about the impact that higher gas prices will have on their pocketbooks and the overall economic recovery.

The myopic thinkers are already pushing policies that will attempt to rectify the problem of higher gasoline prices. These include: regulating speculation in energy markets, drilling more wells, laying more pipeline, and releasing oil from the nation’s strategic reserves. Unfortunately, none of these issues will solve the problem, and they all come with built-in negative consequences that will end up making the problem worse over time. This is because any positive effects these measures would have in the short-term would quickly be offset by increased demand in the medium- to long-term. In other words, it would not take very long for all of the extra supply to be absorbed by the market and we would then be right back where we are now. This problem cannot be truly solved by marginal increases in supply.

If we truly want lower gasoline over the long-term, then we must quit demanding it. Our current economic model is addicted to cheap oil, and we cannot outrun this addiction. There is simply not enough gasoline in the world to sate our appetite for “more.” We must cure it. This will require new products, new infrastructure, and most importantly, a new mindset. But it is the only way to reduce permanently the exorbitantly high costs of crude oil and its derivatives on our economy and our culture.

Just as the age of the automobile represented a huge opportunity for an economy that was emerging from the horse and buggy days, the development of an alternative energy economy will be a huge opportunity for manufacturers as we progress through the next century. So the question is, “Are you currently doing everything you can do to reduce your use of gasoline and promote the development of alternative fuels that are more supportive of America’s domestic resources?” If not, WHY not?

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