Third Way Perspectives
Posts Tagged ‘gas’
March 19th, 2012
This piece originally appeared in National Journal.
Who’s to blame for rising gas prices? No one. And everyone. The recent spikes we’re all seeing as we drive around are unavoidable. They are the consequence when there are no other widely available options to fuel our cars, trucks, and airplanes. As we noted in a recent paper, Why We Face More Pain at the Pump, current price spikes are the result of worries about renewed conflict in the Middle East, a growing global economy, and refineries going offline.
On the Middle East:
The oil market is spooked. Why? Tensions with Iran over their continued development of nuclear weapons, and Iran’s threats to cut off oil to Europe and close the Strait of Hormuz. Closing the Strait would shut off the shipping route for 20% of the world’s oil, dramatically curtailing supply. [Read more about the possible effects of war with Iran in our recent report Keeping Our Powder Dry] In 2011, the civil war in Libya had a similar impact on oil prices, despite the fact that Libya only accounted for 2% of global oil supply.
On the global economy:
Through the end of 2011, markets were frightened by the prospect of a Greek default pulling Europe, and the world, into a deep recession. This helped keep oil and other commodity prices down. In mid-February 2012, the European Union agreed to provide Greece an additional round of bailout funding to meet its debt obligations. With an economic crisis seemingly averted, economists anticipate that the global economy, and the demand for oil, will begin to grow more quickly in 2012.
Every year, domestic refineries take a time-out in the spring to perform maintenance and switch to a summer blend of gas. This year, a host of refineries began maintenance early, disrupting gas supplies earlier than usual. At the same time, several refineries are closing because high oil prices have destroyed their profit margins.
Our nation must begin to provide alternatives to gasoline. Whether the option is natural gas, electricity, or biofuels, forcing oil to compete for consumer dollars, would drive prices down. Will the price spikes caused by Middle East hostility, economic recovery, and refinery shortfalls be enough to move Washington to act? Only time will tell. I for one will be buying a Volt or Prius as soon as I can.
December 18th, 2009
Originally published in National Journal
The world leaders who just met in Copenhagen were trying to prove Mark Twain was wrong. Twain allegedly said, “Everybody talks about the weather, but nobody does anything about it.” Twain may win that argument. Sarah Palin certainly thinks so. She wrote in The Washington Post, “The agenda-driven policies pushed in Copenhagen won’t change the weather, but they would change our economy for the worse.”