The big story this summer are the gas prices. Americans are still driving and buying SUV’s in record numbers. Outrage over higher prices is starting to become louder and louder. An LA Times article reads “GOP Fears Gas Price Anger May Spill Over,” but the heart of the article reads:



I believe Bush is getting what he deserves after making gas prices an issue in the 2000 election. If the public is unwilling to take drastic steps there appears to be no answer for this problem in the short term.

Questions for debate:

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

Are Americans willing to make sacrifices to lower prices?

Will the GOP be held responsible over this issue in 2006?

Do the Democrats have a plan?

Is there a short-term solution to the current high gas prices (if yes, what is the solution)? Sure I guess dipping into the national reserves would be a short term solution but...then again a long term problem as well.

Are Americans willing to make sacrifices to lower prices?American's as a people are not willing to do anything. This is a cake and have it kind of nation. Fight the war but not with our son's, public works but do not tax us, fix our energy problems but lets not conserve, lower gas prices but lets not lower speed limits or carpool.

Will the GOP be held responsible over this issue in 2006?No. I think the democrats will pick up some seats (Santorum and maybe some Ohio seats) maybe but republicans control the only issue that matters anymore when electing a politician....moral values.

Do the Democrats have a plan? Other then dip into the national reserve I havent heard of anything. The powerless minority party only tends to be a factor when someone needs to be blamed for something that is failing....like revamping social security. I think I have seen polls that show that congressional democrats are rated below congressional republicans (Harris Poll)....this despite not being in power

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

Sure, don't use so much oil. The price is set by the market...if demand falls, price will also.

Are Americans willing to make sacrifices to lower prices? Clearly not...otherwise the price wouldn't be where it is.


Will the GOP be held responsible over this issue in 2006? Probably. Politics is great at taking current pain points and using them in elections...usually more with rhetoric than solutions.

Do the Democrats have a plan? Not really. Again, the problem is demand. I don't think either party can legitimately claim they're going to change that very much in the near term. Which won't keep them from claiming it anyway, I imagine.

I agree with Hobbes. I also want to point out that while we grouse about paying $3 a gallon here, in Europe they're paying more than twice that ... and have been for many years.

An Englishman wrote to my hometown paper today following a visit here, quite amused that Americans build enormous houses and drive huge vehicles but then squawk when costs are driven up surrounding this inflated lifestyle.

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

Short of companies like Exxon, Shell, BP, etc deciding that they don't want to make quite so much money the only short term solution is to cut taxes on fuel. The cost of fuel also includes a decent amount of tax depending on the state you live in.

However, I don't really think that is a good or realistic solution. Many states depend on those tax revenues to operate and if we were suddenly to take them away it would be a serious problem for many of them. Secondly, it is just a bandaid. Let's say that you could lower prices by 30 or 50 cents by taking out some taxes. The price of gas would continue to rise even without the taxes included because you haven't solved the problem.

I don't believe there is a short term solution to the problem that wouldn't just be a cheap bandaid or cause other problems by implementing it. The only solutions here are long term solutions that are going to require thought, planning, committment and money. I just keep waiting for the boiling point when people will demand these solutions. If people in Texas are loudly complaining about $2.50 gas I can't wait to see what happens when it hits $3.00 (It is 10 cents off $3.00 here in San Francisco and has been above 2.50 for the past 2 years pretty consistently.)

Are Americans willing to make sacrifices to lower prices?
A good question. I think Americans have made sacrifices in the past (specifically during the 70's and WWII) but I'm not sure that we are culturally capable of doing that now. I also don't think there are any sacrifices that can be made to lower prices, the sacrifices I am thinking of have to do with reducing consumption. Is there something specific you had in mind?

Will the GOP be held responsible over this issue in 2006?

I think that they are responsible and they will be held responsible. The GOP has had almost the perfect storm opportunity for passing some good legislation to get us off oil, increase fuel efficiency, etc and they haven't done anything with it. People are obviously very hot about gas prices and this could easily be sold from a national security standpoint of reducing dependence on foreign oil as well.

I think people would be receptive to all kinds of measures such as strict increased fuel efficiency standards, heavy investment in alternative fuel options and heavy investment in public transit infrastructure. And I'm not talking about a token proposal to say you are doing something, I'm talking about significant funding.

The other thing the GOP has going against them is that a lot of people believe, rightly or wrongly, that this war in Iraq should have brought us more oil and reduced prices. It clearly hasn't done that and each day we continue to be there and the price of gas rises it'll be bad news for the GOP.

Even this "energy" bill that was recently passed by the GOP congress was more about handouts to their friends than solutions to problems. They have had plenty of opportunities here and they've blown them.

Do the Democrats have a plan?
I have heard good ideas from numerous Democrat and Progressive voices on the subject. As far as presenting a plan in Congress? No that hasn't been done for good reason. The simple political reality is that when you aren't the party in power you don't control the legislative agenda. Many, many people here at AD have made a point of stating that fact for other reasons, it sure is nice to be able to use it in reverse

No one ever made that claim, but you're right. People assumed that to be the case. Kind of like Saddam being a part of 9/11. If we are going to blame the GOP, we can also blame the Clinton administration for doing nothing about this for eight years. Prices started going up before Bush became President. I would say both sides are to blame for 20 years of practically having no energy policy.

CJ you said:The steps you mentioned to correct the problem would not effect transportation prices in the short-term. So even if they initiated the programs you mentioned we would still be in the same place we are now. Would like to clarify how the GOP is responsible for the current oil prices?



Your idea that is it "Democrat strategy" not to have a plan seems like wishful thinking. Simply put, congressional Democrats do not have a popular plan on energy. If Democrats want to take advantage of this issue in 2006 they will have to come up with something popular.

I would also like to state that prices for gas are determined by market factors such as supply and demand. Exxon, Shell, and BP are making a lot of money, but they're not making the prices higher

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?
I don't think that there is a problem here. The truth is, gas prices in America have been too low for years, and prices are at last catching up with long-term economic realities. I am glad to see the price at $2.50 a gallon and would like to see it continue to climb, stabilizing at $5.00 per gallon in maybe ten years' time. Yes, this will certainly hurt many consumers and the economy, but this is a short-term pain to address a long-term problem that could destroy our society in 50 years.

Are Americans willing to make sacrifices to lower prices?
It really doesn't matter what Americans are willing to do. Oil prices are high, and Americans have no choice in the matter. They will simply have to learn to adjust their lifestyles, taking fewer trips, purchasing smaller cars, and carpooling. Some Americans are smart and will learn sooner. Other Americans are dumb and will take longer to grasp reality. They'll kick and scream, bitch and moan, try to find a scapegoat, and eventually get it through their thick skulls that finite resources run out.

Will the GOP be held responsible over this issue in 2006?
As the ruling party, they'll get some blame, but as industry advocates, they'll shed some blame. I think that many will blame the war in Iraq, which isn't really right -- the war broke the logjam that was holding prices down. In the long run, I think that they'll suffer from the general discontent driven by this and other issues.

Do the Democrats have a plan?
Not that I know of.

It is the oil companies making money that incents them to produce more oil that then increases supply, which helps to keep the price low. This is an important point, which is usually glossed over when complaining about our countries non-existent energy policy. Even Clinton, no big supporter of Big Oil, followed essentially this logic with his energy policies. It's not that it isn't a policy, but rather that it is a policy based on the reality of the fact that oil is currently essential to our economy, and further upon the fact that most Americans aren't willing to make sacrifices to change that. Oil is relatively cheap, it is easy to use, and it is readily availably. So, people use it. Making everyone pay twice as much for it isn't going to keep you in office long enough to enact policies to change those fundamentals.



The alternative is to do things to increase supply, which is exactly what the energy policies that have been put forth for the last couple decades have been doing.


Again, this is missing the point I mention above. If anything, the current energy policy is responsible for keeping prices down, not bringing them up. Sure, the long term effects might be different, but that's not what's causing the current run-up in prices. Of course, this isn't going to keep it from being an issue if prices stay where they are...it just points out that the claims that will be made aren't really based in fact.



All of which takes money...which will come from where? The Democrats will have to be careful on this--you can't campaign on Bush's budget deficits, and then propose all sorts of new programs that will require significant funding. Not that I disagree with what you are saying here, I am merely pointing out the political issues they would face in putting it forth.



Again, I don't really see where passing legislation to assure continued supply of oil deserves the rhetoric it receives. The American public demands oil...its not really the government's fault if they then make sure they can get it. As I said above, even Clinton's energy policies had to bend to this reality. Changing it will, as you state, take significant funding, and even that won't ensure success. Remember all the incentives for solar heating? Where is that now? Almost non-existant. Oil is hard to beat in the marketplace, and there really isn't that much the government can do about it, short of providing massive subsidies which they don't have the money for.



I'd be careful playing that card...you are essentially saying the Democratic party is irrelevant until the next election, and can't do anything for their constituents. Is that really how you want to play it?

One would think, but apparently not.


Emphasis mine.

Basic business math will tell you that when costs rise and output declines profits should go down. But that’s not the case here. The article goes on to mention that revenues increased from refining. Huh? I thought production was down, how do you refine more when production is down?? Maybe it’s my lack of complete understanding of the oil business but something isn’t quite right here. The same article states that Exon’s profits, not sales, profits, where 7 BILLION dollars in the second quarter.

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

Short term is fairly vague. But one of the immediate opportunities could be to reduce the number of gasoline formulas that are used across the nation. It adds to the cost of refining and is a bottleneck for increasing production.

Demand a percentage of cars produced must be hybrids, not just increased efficiency that Bush put in his latest energy bill. I'm amazed that you can't find a hybrid on the lots but GM is going to lay off 25,000 in the next three years due to soft sales.

Are Americans willing to make sacrifices to lower prices?

Since prices are determined by global demand I think that every opportunity Americans take to conserve will be met with a higher demand in China and elsewhere so I’m not sure how much impact our sacrifices will make. I’m already seeing people who are taking busses and car pooling so the sacrifices have started, probably more out of fiscal concerns than an effort to reduce the cost of gas.

Will the GOP be held responsible over this issue in 2006?

Yes and they should be. Not since Carter has one party held control over the executive and legislative branches which is the perfect opportunity to enact real change. They’ve done nothing to alleviate our dependency on gas unless you consider giving oil companies tax breaks in the midst of them making historical profits.

Do the Democrats have a plan?

Does the GOP? They're the ones driving the political Hummer right now. This will obviously become a point of contention in upcoming elections so I expect a more detailed and effective energy plan to emerge from both sides. But it will be too late, I expect a full fledged recession within the year.

Clinton and the Democrats controlled all three branches from 93-95 when they did "nothing" as well. I love how most people here agree that there's nothing we can do in the short-term, but want to blame the current Congress for a failure to initiate long-term plans. Even if the GOP passed everything a Democrat could ask for in 2000, we would be in the same place today.

I'm going to choose to ignore the political blame-game questions. I've given up trying to figure out who's responsible for screwing us at the gas pump...there are just so many.

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

Gas prices go sky-high every year during the summer. And every year they come down in the fall. Each time, of course, they don't go down quite as much. Whoever is in charge of pricing realizes that Americans drive more in the summer when kids are out of school - what a big surprise.

Short term solution: sell the SUV, buy a smaller, more fuel-efficient car, and drive less.

Are Americans willing to make sacrifices to lower prices?
The majority? Obviously not. SUV sales were tanking in May (down 17%, I believe), but when GM, Ford, et al launched its "Employee Discount" plan, all the sheeple went a-runnin' to get themselves that SUV they couldn't afford before (as if the cost of driving the behemoth is going to be any cheaper after they get that fat discount!!!). Sales went up again.

Unless and until Americans get a mental readjustment and realize they don't have to have a bigger one than the Smiths, most will never give up their gas guzzlers, and Detroit will keep cranking out the big 'uns.

I honestly don't care about who to blame. It makes for an interesting sideline discussion on politics but I just want the situation fixed. There is absolutely no reason to sit here and say it was Clinton's fault, no it was Bush's fault. My position is that the GOP is currently in power and has had numerous opportunities to do something about this problem and they have chosen to not do that (repeatedly). If America's Debate had been around during the Clinton administration I'd be leveling the same criticism at them. It wasn't and I don't think the past is relevant to this debate, the issue of gas prices wasn't such a hot issue then.


They are the party in power Nemov, it happened on their watch and they have had numerous opportunities to put plans in place to prevent it in the future. They haven't. They hold responsibility for that.


I do not hold a position with the Democratic party and I have no idea what their strategy is on this or what is said in internal memos. I was discussing a political reality. The party in power drives the legislative agenda, it is politics 101. That doesn't mean the Democrats don't have a plan.

2006 is around the corner I guess we'll soon find out if they have a plan or not.


And the reason that the price is going up Hobbes is because supply cannot keep up with demand. We keep demanding more oil and it just isn't there. From everything I have read it is pretty clear we are dangerously close to peak production. Furthermore the sweet easy to refine crude oil is becoming more scarce and the stuff they are refining now is much dirtier and more difficult and expensive to refine.


And our ability to do that is coming to an end... now what?


Well first of all passing strict fuel economy laws doesn't require any money other than paying for Congress to be in session. But to your other points I can think of plenty of things we could cut to find money for these types of things if I happened to be in office. Not all of them would be direct funding, many of them would be large tax breaks and incentives for American businesses to invest their own money and pursue these things.

I am pretty sure that I could do an infinitely better job of balancing our budget than all of Congress combined.


I'm just throwing it back Hobbes. I can't even begin to count the number of times I have had that rhetoric used on me in various debates here when I disagreed with something that was being done by our government.

Would I like the Democrats to be attempting to show some leadership here? Sure. But frankly they are probably fighting so many battles right now that there simply isn't time. In a lot of ways I think that the system is seriously broken, but that is for another debate.

Good point nemov, I should have stated what I was thinking: through the full term of the presidency. It’s called “sometimers” and it happens when you reach a certain age. The 3rd branch is up for debate some place else and I didn’t mention them because they don’t set policy.

And I’m sorry but you’re wrong, I mention two possible short term solutions. I’ve been looking for a new hybrid for months and the only option is a waiting list, a long waiting list. In the year 2000 if congress took action they could have implemented several measures that would be in effect today, like the one I mention: if you sell cars in the U.S. than x percentage must be hybrid models. No, they chose to give tax breaks to business that purchase SUV’s.

I understand that most hybrids double the average fuel efficiency which translates into potentially cutting our auto related gas consumption in half. At the first of the year it was estimated that demand for hybrids will outpace supply for several years. Now I would imagine that market equilibrium will be pushed out a few more years and the year 2000 opportunities have been wasted.

This is one of the big misconceptions about the oil business...that being the large, American companies (Big Oil) produce the oil they refine and sell. This is not the case. Production, refining, and distribution are all completely different businesses. Currently, most American companies are primarily refiners and distributors...they get the oil they refine from other companies (in the Middle East, South America, Mexico, and the North Sea). To make things even more confusing, much of the oil they do produce also gets sent elsewhere to be refined and distributed (I think much of the North Slope oil goes to Japan, for instance). So, falling production and increased revenues from refining are all quite possible.




I don't really see how GM producing a bunch of cars people aren't buying is going to help anything....that will just lead to more laid off auto workers. The problem isn't supply, its demand. If more people wanted hybrids, the automakers would all be too happy to sell them. The problem is that such cars are expensive to design and produce, and are therefore more expensive. The additional cost isn't justified by the fuel savings accrued, and people don't seem willing to spend extra money to get them. Having a bunch more of them on the lots won't change that.



I keep bringing this up, but it seems to be continually disregarding. Alleviating dependency on gas is a long and expensive process. Energy policy over the last 30 years has focused not on demand, but on supply. If you want to blame somebody for this, blame the American people. If they really wanted alternative sources, they'd be out there. But, no one seems willing to pay extra for them. Given that, ensuring supply is about the only thing government can do. Even Clinton had to face up to the reality of that.



Again, this is painting the Democratic party as completely irrelevant and useless to their constituents. Is that really how they wish to portray themselves? Being in the minority in Washington doesn't mean you can't get anything done...lack of effort does. I'm amazed their constituents are so quick to excuse their inability to put forth any legislation to serve them. I don't really think 'The party that has no ideas and doesn't do a darn thing' is the mantra they should be trying to put forth. Developing alternative energy has long been a core Democratic platform. I keep hearing that the current environment is the ideal one in which such legislation could be put forth. Don't you expect a little more from those who represent you? I don't really see where decrying what the other guy isn't doing is helping any.

I think you are flat wrong about alternative sources Hobbes. People do want them now and it could be for a variety of reasons but gas prices are probably driving it to a large extent. People are lined up on huge lists to get hybrid cars. When I was in college (which wasn't so long ago) gas was between 80 cents and $1.00 a gallon in Texas. As that changes people are going to be demanding alternatives.

You keep saying that energy policy was focused on supply and not demand - well it is time for us to face up to reality and change that. That is why discussing the way things were is really kind of a pointless finger pointing exercise. What we need to be discussing is the way things need to be. Furthermore, if the our elected officials in Washington don't want to do anything about it then they are going to get criticized and blamed (and rightfully so) even if they are only doing what we have done for 30 years.

You, nor anyone else, would accept that excuse on national security or terrorism policy in the wake of 9/11. This really isn't any different.

The government frequently passes laws, hands out tax breaks/credits and funds initiatives to get us moving in a certain direction or encourage certain behaviors. In this case we need to be looking to give people serious incentives to buy hybrid cars and we need to be giving manufacturers serious incentives to develop alternative fuel technologies.

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

I don't know if you mean that there isa solution to decrease the prices or a solution to deal with their rise. I would say that we can all adapt to a certain degree (as other ADebaters have eloquently put it), but I do not expect prices to go down any time soon. Why would they when China is pulling all available resources to fuel (so to speak) its growth, while the G8 nations are not diminishing their consumption in any way?

Are Americans willing to make sacrifices to lower prices?

Americans will get used to higher prices. When you need a car to go anywhere around, you simply have no choice but to accept what's happening. I happen to share Erasmussimo's view that it's about time that 'fair prices' happen here too anyway. If gas prices are high in Europe, why should they not be here?

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

Ideas abound it seems, I just ran across an interesting news article today - here.


Now that last part I'd be really interested to know more about - the environmental impact of this approach. I'll have to research that a little bit more.

This proves my point though that if we start trying to think outside of the oil box then good ideas which might have died previously will come to light.

Oh... and Schweitzer is a Democrat by the way.

Edited to add: Apparently there are some articles out there that suggest fuel produced in this way would not only be more energy efficient but cleaner too - article.

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

No. I believe this is a long term market problem. Long term high prices will encourage consumers to reduce demand and increase fuel efficiency in their personal vehicles.

Are Americans willing to make sacrifices to lower prices?

Yes and no. I don;t believe American are willing to give up personal vehicles. I do believe that high prices will dramatically change the type of vehicles bought. Here in an SUV laden county in Tennessee I have seen several families trade in for slightly higher fuel efficiency and conversations at the water cooler have been serious conversations about purchasing hybrid vehicles. A friend of mine who I would have least expected to do so, bought a hybrid last month. He was enticed by the tax break and the higher fuel efficiency.

Will the GOP be held responsible over this issue in 2006?


Yes they will. And this saddens me. For all of the things I think the public should hold the Republican administration accountable, this thing that they don't have much control over will likely have a major impact. I don't thing anything in the energy bill will make the public feel that the Republicans are on the right track.

Do the Democrats have a plan?

Nothing coherent. And I will not hold my breath for one either. I hope if the Republicans pay that the Dems that replace them in their seats have something better to run on than "what is the DEAL with gas prices?"

There is another angle to the whole "Gas Price Crisis". I recently found this article from the Seattle Times. I'll post a few quotes here but please read entire article. It explains so much that is almost never discussed about the issue.



Over the last 20 years, the price of groceries has risen more than the price of gas. And we spend at least three times as much on groceries (with a higher inflation rate) than gasoline. But that doesn't make news headlines. There are no calls for Congressional hearings into "BIG FOOD" Why is that?



Do I like paying higher prices on gas? Heck no! I don't like paying higher prices on anything. But even at $2.79 per gallon (our current price), I think gas is a pretty good deal. I drive a Toyota pickup that gets about 25 mpg. When I thoughtfully consider that I can transport myself, a passenger, and bed load of cargo across twenty five miles in about a half hour for two dollars and seventy nine cents, I honestly do not feel cheated or ripped-off.

Especialy when I observe that there are people in bars and coffee houses paying $2.00-$3.00 for a 12 oz. bottle of beer and $3.00-$4.00 for 20 oz. cups of cappuchino...who then commiserate about those "damned gas prices"

Ya gotta love it!

I would like to point out that the bottleneck in supply is not the amount being pumped out of the ground. There is no “oil shortage.” The number of refineries has decreased over the last twenty years. With the current refineries in place there is only so much oil being turned into gas. What we are experiencing is the net result of an increasing population, increased international demand, and less fuel-efficient cars which results in a higher demand for gas. Unfortunately, the US output capacity has not increased.

SUV’s continue to sell at record numbers so even if more hybrids were introduced to the market it would not change the price situation.

Ah Ha! Now I think we're finally on the same page...

As I have tried to state, I am not against the type of change you are advocating. I have only been trying to point out, in true Hobbesian fashion, why the policies have been the way they have been for the past 30 years. I have long been an advocate of alternative energy sources...being self-sufficient in energy is a national defense issue. However, there is another aspect of this that needs to be considered as well. Suppose we were to become self-sufficient in energy...no longer needed oil import (or even just significantly reducing them). This would likely have a detrimental impact on the economies in the Middle East, throwing those states into turmoil and likely leading to a rise in support for the radical Islamic movement. This also would have a negative impact on national security, that, IMHO, must be considered.

Fair point and I understand how they can generate more revenue through refining and not necessarily off of production. But then you said this in an earlier post.


So why didn’t Exxon produce more oil? This is where I have a problem applying a basic supply/demand model to the oil industry and that’s why I’ll stand by my earlier statements that something isn’t quite right here.


I don’t know how the demand in Texas is for hybrids, but as I mentioned earlier there’s about a 6-8 month wait in my city for a new model. That tells me the demand is there and if gas continues to rise demand it’s certain to increase.


I couldn’t agree more and that’s why I’m so critical of the current administration and GOP controlled congress, it has to start some where. When you’re the majority party your’e expected to lead, blaze trails and make real changes. Instead of the ill advised tax break the governments should have started something similar to the Works Program, building mass transit systems, building bike trails/lanes, tax breaks for urban renewal (condensed living), investing in light and heavy rail. There are dozens of ways to start reducing our dependency on oil but instead of moving in that direction all I’ve seen is legislature to promote more usage. That’s not leading the way.


It’s been covered why SUV sales are strong: employee pricing for everyone. You have to ask yourself why the auto manufacturers offered this, writing on the wall? But there’s a much larger issue at stake when discussing the price of gas: recession. I agree (see earlier past) that we might not be able to make a dent in the price of gas with reduced consumption, but if consumers cut their monthly gas costs in half then there’s money left over for other things. And right now I’d like to buy a hybrid and cut my gas consumption but it’s not an option.

This kind of gets tricky but stick with me here. I believe the biggest problem for the GOP on this issue is that it is a perceptional problem. The Republicans have been trying to pass an energy bill for a few years and the Democrats have stonewalled it. My point here is not whether or not that energy will even work, but that this issue is about perception. When this comes down to an election, Democrats can only say they have “no plan” and they object to the only plan offered.

The GOP (rightly/wrongly) can claim they have led on this issue. If you remember back to before the GOP was the majority party, they always had a “minority plan.” I like some of the ideas you suggest, but Democrats on the Hill are not making it part of the debate.

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

This is a thorny problem, and I don't believe there is a quick fix. Additional exploration, extraction and refining capacity can't be switched on like a light - it takes years to come online. Pundits in the UK press have seriously speculated about the advent of the $100 oil barrel, which would make extraction from oil shales in Canada and elsewhere (elsewhere outside the Middle East, that is) economically viable.

And the increase in prices has a plus side too - producer countries are making a mint from the increases in oil prices. This includes the UK, where Chancellor Gordon Brown currently faces a "black hole" in his tax-and-spend policies (which should be mundanely familiar to Americans used to living with a multi-trillion dollar government defecit), but whose plans might well be rescued by significantly higher oil tax revenues from North Sea production than he anticipated. Which would make him about the luckiest finance minister in the G8.

But the current high prices are caused by the economic growth of Asia, mostly China and India, driving up demand, with niggles over production stability in the Middle East currently only of minor concern.

America is no longer the only country with a booming economy than can suck in oil at rock bottom prices - you now have competition, and in a free (ish) commodity market such as oil, high demand and relatively inflexible supply will only drive prices up.

Last time there was a rocketing of the oil price comparable to today - the 1970s oil shocks in response to Middle Eastern instability - whole economies around the world tumbled into depression.

This isn't happening this time around, for two main reasons.

Firstly, if you link oil prices in the 1970s to inflation rates and translate them into today's prices, oil today is still laughably cheap by comparison.

Secondly, inflationary pressures in the rest of the economy are being held in check by a flood of cheap inported goods (and a fair wedge of cut-throat retail competition), which are mostly coming from China and India.

One thing America could do is stop expecting ever-lowering prices in places like Wal-Mart, because as things are the cheap stuff people keep buying there is only helping to boost the Asian economies, which is in turn driving up their demand for oil as they get ever more industrialised (and wealthier, so their domestic markets are also growing).

This is true to a lesser extent the rest of the world; lesser because most of the rest of the world doesn't have a huge trade defecit with China the way America does - the Chinese want to buy European goods & services almost as much as they want to sell their won in Europe, which is not true of their trading relationship with America.

But will anyone stop buying cheap stuff? Nope. Of course not. Western publics, and the American public in particular, are becoming more and more demanding that government "do something" about this or that issue, but less and less willing to pay for it - either by changing their own behaviour or by paying the necessary levels of taxation to fund it all.

We demand they do something about oil prices, so we can keep driving 200 yards in a six liter SUV to the store across the street to buy cheap Chinese-made goods we don't really need anyway. We demand they do something about obesity, so we don't have to stop driving two miles across town (rather than walking) to get to the steakhouse in time for the all-you-can-eat buffet.

Are Americans willing to make sacrifices to lower prices?

No, because prices are just uncomfortable at the moment. If they double from here inside the next year or two (which might easily happen if, say, America takes military action against Iran), then we might be getting towards the kind of levels that are high enough to really incentivise (American) consumers to change behaviours, rather than just demanding every else changes so they don't have to. Perhaps then you'll try to wean yourself of unnecessarily large road vehicles and buy the same types that the rest of the world gets by on (where 2 litres qualifies as a large engine). Perhaps you'll also wean yourself off summer air-conditioning set to levels where you have to wear a woollen sweater indoors to avoid being too cold. You know - simple common sense things like that. What's wrong with inconspicuous consumption, after all?

Will the GOP be held responsible over this issue in 2006?
Do the Democrats have a plan?

I don't believe that the Republican/Democratic parties have yet bought into the idea that the solution to energy prices and concumption is radical change rather than tinkering around the edges.

Of all the mainstream parties anywhere in the world, only the Greens have cottoned on to the need for radical change, albeit because of their fears of the Greenhouse Effect, which longer-standing members will know is in itself subject to much contention. Yet the Greens have no real solution as yet beyond some wishy-washy agrarian fantasising the belongs more on Captain Beeefheart album covers than in real-life political discourse.

Nobody anywhere in the world has yet come up with the answer - the Kyoto treaty doesn't do it, because it un-radically let's the booming Asian economies off the hook. Kyoto will never work because it's not radical enough, yet it was rejected as too radical by America and some others.

So all anyone can do anywhere in the short to medium term is to keep paying more to fill 'er up and stop pretending there is anythig that can be done about it.

As a final aside, Europe's high petrol/gas prices are tax-driven. This gives governments here the flexibility to decrease their tax rates if oil prices keep going up - cushioning their economies from the effects. America, with comparatively very low taxation rates, does not have that option, and is more dependent on oil anyway.

If you aren't careful, and if oil prices keep going up, your economy could find itself in the doldrums just as Europe - and Germany in particular - gets going again. With Chinese and Indian growth creating another nucleus of the global economy with the potential to become much larger than even America in coming decades, the next five or six years would be a really bad time to be in such a position. Especially with big trade and fiscal defecits.

Who's to say they didn't produce more than they would have without the incentives? Also, the incentives give the money used in exploration...actually production from any discoveries made might be several years down the road. Some of the money also goes to R&D into ways to get more oil from existing fields...production of which could also be several years down the road.



Texans don't want them there Hi-brids...jus' not nat'ral to have 'n 'lectric motor in an auto-mobile

However, this points out two different problems with hybrids (which, I might add, aren't really an alternative...they're a hybrid between where we are and an anlternative)....lack of demand (Texas) and complexity of production (where you are). But, I have nothing against hybrids...the more, the better. Especially since they make particular sense in SUV's, as those vehicles have the space for all the additional equipment.




No, but it is demonstrating conservative philosophy. It is against conservative idealogy for the government to do anything remotely like the Work Program, invest in mass government anything, etc. It is up to the market to demand such things and companies to then supply it. In short, by doing nothing, they would be advocating such things through the market. If they're not taking off, it would because of the market. What's preventing local communities from building mass transit systems, building bike lanes/trails, investing in light rail, etc? If their community wants it, they should be able to build it. The federal government doesn't need to get involved. Naturally, the Democratic stance on this would be just the opposite..and I really don't have a problem with that, either. I would just point out that the ball is then in the Democrat's court to put something forward...expecting Republicans to do something that goes against their basic philosophy isn't really a fair expectation.



Even if the difference in your car payment were greater than the gas savings it would provide? If you really want one, come to Texas...I'm betting you could find one.

Nemov, I don't buy that. This energy bill they have been trying to pass (and the one that eventually did pass) is far more about handouts and keeping the system running than making any sort of changes. I applaud any Democrats who opt to stand against something like that. It is the right thing to do because just passing something called an "energy bill" which is full of the same old pork and useless measures that have crossed the President's desk for decades is not leadership.

I think the GOP has a real opportunity here and they have squandered it. The price of gas and more broadly energy policy is something people can really identify with on numerous levels. Heck they could even tie it right in with their platform on terrorism. The fact that they haven't suggest that they are either not very bright or they are too deep in bed with oil interests.

Furthermore, during the next election the Democrats could present their energy plan as part of the platform. They don't have to attempt to pass it in Congress first to use it.


I don't know that is accurate. As I showed you in that previous article the gov of Montana is making it an issue. Without pouring over CSPAN transcripts you have no way of knowing whether they tried to make some of these ideas part of the debate, all you can say is that the media didn't report on them so we don't know about them.

That's kind of like saying everyone on the board of directors at Microsoft must always agree with Bill Gates because we never hear about it. Congress is a little bit more open than a corporate board meeting, but hopefully you take my point.

Additionally, how many battles can you fight at once? Given some of the things that the GOP congress is trying to pull I'm sure they have to pick their battles.


That is a cop out Hobbes, you know as well as I do that'll never happen while they are the minority party in Congress. They are on the defensive 24/7 out there. What you are doing is excusing the GOP's lack of leadership on this issue and trying to hang it on the Democrats at the same time.

So party philosophy is more important than national policy? I thought fiscal responsibility was part of that conservative philosophy as well? Any way, you know as well as I that if the Democrats were to try and push major changes, actual reform, it would probably never make it out of committee. To CJ’s point, they just keep sloping the hogs.



Absolutely, that’s why I’m looking. If more hybrids are produced then the cost starts to go down and if the cost of gas continues to rise, which I fully expect it to reach $100/barrel, than hybrid owners start to bank money. And once more hybrids are being produced than the competition increases in the market place and then technology starts to improve, yielding better and more efficient vehicles.

And I appreciate the offer to come to Texas to buy my hybrid, but then I’d have to drive it back. Of course it may be cheaper to ship it back UPS.

Keep in mind I was taking about perception in the remarks you quoted. In an election those types of talking points will not work. I can see the commercials now… “Democrat Joe Smith voted against an energy bill X times.” The specifics of the energy bill itself is a different debate, but I am of the opinion that the Democrats do not have much ground to stand on.



I did say Democrats on the Hill. I am sure some members of Congress have pontificated about this topic, but I have yet to see an actually detailed plan on energy coming from the DNC. There’s nothing wrong with disagreeing with the Majority’s plan, but add something to the debate.

Are Americans willing to make sacrifices to lower prices?

No. Even the well educated of voted against such a sacrifice here recently.

Will the GOP be held responsible over this issue in 2006?
Do the Democrats have a plan?
Maybe the GOP will pay at the polls for us paying at the pump. They really should be because their record is weak. Clinton wanted to impose energy taxes in 1993, specifically on oil.

Looking back on it, that would have been nice. Of course Clinton was taken to the woodshed for it.



I’m with Erasmussimo as well. Let the price go $5.00/gal. We’ll have to change our behaviors then. It’s a shame that we cannot do this voluntarily.

Or is it just possible that what you are doing is excusing the Democrats lack of effort on this yourself? Especially when I have offered that the programs you desire go against conservative philosophy, but fall completely under liberal ideology. I gather then that you are satisfied with essentially a do nothing party which has nothing they can even hope to offer their constituents. I would think you would expect a little bit more than that from your representatives, but I guess not. All I can say to that is you must be getting exactly what you voted for, to so easily expect nothing more. In which case you don't have anything to complain about.



Ahh, but Fife...it is...that is exactly why I pointed out the very programs that are being discussed here would go against conservative ideology. The basic gist of what was being desired were massive government programs designed to develop and push alternative energy sources and mass transit systems. What exactly would be fiscally conservative abou that? On the other hand, it falls right under liberal ideology. But, as with CJ, it seems that Democratic followers are perfectly content with adopting a completely defensive, can't do anything party strategy. To which I can only say you are then getting just that, and have nothing to object to. There have been numerous instances of minority parties getting legislation pushed through. At the very least, they could offer a plan to have something to discuss through the media. But, why bother when your constituents are just as happy to have you do nothing?

To summarize, it seems that what is going on is that the Democrats here are upset that the conservatives in congress aren't pushing a liberal agenda, yet are very quick to excuse their liberal representatives from not even attempting to do anything about it themselves. Well, if that's all you expect from your representatives, then you shouldn't complain when you get it.

There's something not right here. Yes, the Democrats have not offered anything yet. But that hardly seems a missed opportunity. Any effort they put into offering an alternative would be a total waste of time, as the Republicans would simply shoot it down.

The right time to offer an alternative is not now, but next electoral season. Then the Democrats could go to the public and offer something constructive. Perhaps they won't. But castigating them no for not tilting at windmills seems unfair to me.

I disagree with this. The Dems putting legislation forward that will get shot down is not a pointless effort. They need to show that they were trying to do something. It is a marketing scheme to put forward plans now. Sure they will get shot down, but at least it would be something to look back on and say that they had a good plan.

And if they have good ideas, so what if the Repubs coopt them (you stole my moves!) and implement them. They can still claim leadership.

The Dems win on this issue because conservation is an issue associated with the democratic party. Plus, the Republicans have been claiming this century that the problem is not a demand problem but a supply problem. So the Republican energy plans are not green and do not deal with a reality of increasing global demand and increasing American competition for scarce resources.

Leadership is needed here. But I fear Americans only move when the crisis is here and all nay-saying before the crisis is dismissed. (Greenhouse gases, social security as examples)

I think CJ also had a very good point in that such a policy would fall into the national security platform of the Republicans. So, I think assuming such a plan would get shoot down is jumping the gun. There is opportunity here for a bipartisan bill to be put forward. The issue will be funding it, I am fairly sure. That there will likely be significant debate over, with each side wanting to skin the other's horse to pay for it. However, I think having the debate shifting from putting such a plan for to how to fund it would be progress, would it not?

Also, just to clarify...I am not trying to blame the Democrats for not doing this. All I am trying to say is it is a bipartisan problem. It hasn't been just Republicans that have put forward supply side energy bills in the past...it has been accepted policy. I think the reason for that has been primarily funding, but partially foreign policy as well. It has simply been easier to work on continuing supply than it has been to change demand or develop alternatives. Especially when the cost of developing those alternatives has previously far outweighed the cost of the oil they would be replacing (I have even seen papers showing how even electric cars end up using more oil-generated energy than the gas cars they would be replacing). So, it has been economical to continue with the status quo...and members of both parties on the hill have essentially succumbed to that fiscal reality. Even now, as expensive as oil is, it is probably more important to fix social security than it is fully fund alternative energy plans (every month we continue with the status quo is adding $50 billion to the eventual cost of the solution). This will likely be the case until growing demand fed by third world countries becoming more industrialized places demand for oil far ahead of supply (this is a much bigger problem than peak oil, in that oil production could continue to climb but still be far outpaced by growing demand). So, I am not seeking to detract from putting forth such plans...I am merely seeking to state the past and present realities that have led to the current state and which must be addressed in order to get such plans moving forward.

If the Democrats did this and they didn't fight tooth and nai for itl, they'd be accused of mere showboating, and if they did fight tooth and nail for it, they'd be accused of gumming up the Congress with obstructionist tactics. Either way, they lose. Let's be reasonable. There's no point in preparing such legislation at this time.

I like the idea of a bipartisan effort but the Republicans won't let the Democrats be bipartisan. They created the energy bill, they shot down most of the Democratic amendments, and they crammed their own version through without any suggestion of bipartisanship. At this point, the Democrats are reduced to biding their time and keeping their powder dry for the fights they think they might pick up some Republican defectors on.

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

The quickest solution would be to slash all of the taxes, which account for about 25% of the total price. 25% off of $2.50 would reduce the price per gallon to about $1.88. Good luck getting greedy politicians to do that.

You could remove the profits from the oil industry, but that only accounts for about 7% of the total price. 7% off of $2.50 would go to $2.33. ConocoPhilips has a good article on their website about oil profits here. The oil industry is about average in its profits compared with other industries. So they're not exactly gouging the public.

I recently heard, from a gleeful local news person, that Hawaii just placed a price cap on gasoline sales. This is socialism at its worst. If the price of gas climbs too high it will put gasoline companies out of business. This is exactly what happened to PG&E in California during our energy problems. PG&E bought energy at high prices, but sold the energy to consumers at low prices imposed by price caps. Guess what? They went bankrupt. Good luck to those of you in Hawaii when the state will have to bail out the oil industry there.

The long term solution is to either increase production or to reduce demand. I'm optimistic that both will occur and prices will level off. It may take a couple of years though for added production to come online.

I wholeheartedly disagree. Now is the time to put the best option forward. The dems are getting hurt on the no plan thing. There is plenty of point in preparing legislation to advance effective strategy. Good ideas are rarely poorly timed. The above reasons say to me, Washington is full of politics. In a competitive political system the other side will sling arrows, but that doesn't mean that one should refrain from competition for fear of wounds. As they say in poker, you have to be in it to win it.

They don;t have to obstruct Congress to push for something. but Democratic leaders could point at a detailed proposal when they are asked for a plan. Not having a plan hasn't played very well.

Outlaw SUV's theres no point to them, all they are is expensive gas guzzling pointless wastes of resources. Us Hybrids with gas thats 1/2 ethanol.

A point on this as well. If the oil industry rate of profits remain consistent with rapidly raising prices, their profits increase significantly. Now if the profit per gallon remains static, then you don;t have to worry about the rising profits of the oil industry. What would you rather make 7% of 1 million gallons of gasoline sold at $1.50 or 7% of 1 million gallons of gas sold at $2.50. And demand for gasoline is fairly inelastic in the short term so rapidly rising prices are good times for the oil industry.

Being a raging tax and spend liberal (as opposed to be a don't tax but keep on spending proponent) I believe that the gasoline taxes should not be removed. We need to use these taxes to support reducing demand imho.

Is there a short-term solution to the current high gas prices (if yes, what is the solution)?

Nothing short of a major recession and a slow down in Chinese economic growth.

Are Americans willing to make sacrifices to lower prices?

Some are but the majority aren't yet aware of the real situation.

Will the GOP be held responsible over this issue in 2006?

I don't have a crystal ball. They should be.

Do the Democrats have a plan?

Yes, they have several plans, that's part of the problem. Here's one that Dennis Kucinich sponsored, H.R. 2070. Click on Subject if you want to drill down into the substance of the bill.

I agree with a windfall profits tax on oil companies as the bill provides for. They have done nothing to earn the massive increase in profits gained by the rapid run up in oil prices. Instead we are giving more subsidies to the oil companies in the new "energy bill." Perhaps some of the windfall could be retained by the oil companies if they used it to build specific facilities to eliminate bottlenecks in supply.

The real issue however is that oil markets are going to stay tight and prices high because there is no spare capacity in the supply system. Eventually, the market will recognize that supplies are only tight but declining and prices will sky rocket unless energy importing countries cooperate to reduce demand and transition to much higher end use efficiency and alternatives with major interventions in the market.

Hobbes I have said from the beginning of this debate that I wasn't really interested in placing blame on anyone, I just want solutions. But if there is blame to be placed it belongs with the party currently in power because they happen to be in a position to do something about this and they haven't. I find myself in a strange position because on the one hand I have to state that no one has done this correctly for 30+ years and we need to change the way we operate and on the other hand I have to deflect you and others somehow trying to shift the blame to the current crop of Democrats in Congress. That absolutely makes no sense because the Republicans have had control of both the executive and the legislative branch for 5 years now and we haven't seen one single energy reform that doesn't amount ot business as usual or pork.

I have never once said that I approve of the Democratic position on this issue, I have stated quite clearly that I'm sure they are operating in defensive mode at the moment even if there happen to be good ideas out there. It is a simple political reality that the party in power controls the legislative agenda and the minority party just tries to steer interests their way and ensure that the majority party doesn't (from their perspective) screw things up too badly. That is reality Hobbes, I don't hang people on ideological crosses on the way things should be. If I did I'd start by kicking every single politician out of Washington and starting over.

Regardless of who's fault the current situation is, and what can be done about it, it's about to get much, much worse.

The Gulf Coast from Alabama to Louisiana, processes between one quarter to one third of the nations gasoline. All of these refineries are currently shut down in anticipation of hurricane Katrina, and some of them may not survive the onslaught.

Get ready for $80 a barrel oil, and $3.50 a gallon gas in the near future (like the next couple of weeks).

My conclusion precisely! I considered posting something similar but, upon reflection, thought we should confine ourselves tonight to concern for the human tragedy now unfolding. Let's come back to this in 24 hours.

Why do you strain at the 7% profit for the oil industry which does all the work, but swallow the 25% profit which government takes? When gas prices jump up as they are right now, not only does the oil industry benefit, but government benefits even more. I'm sure the liberal tax and spend politicians that you referred to are happy as clams right about now. We will not see a real effort from these politicians to solve the problem.

Anyway, a major cause of our current spike in gas prices is the lack of refineries in our country. No refinery has been built since 1976. Currently our refineries (149 of them) are working at 100% capacity. Only one third of those refineries are capable of refining heavy crude which costs about $14 less per barrel than regular crude. Hurricane Katrina took a number of our refineries off line which only exacerbates the problem.

Apparently the U.S. government makes building new refineries extremely difficult. ABC news did a rare piece the other day exploring the reasons for our high gas prices. They highlighted one refinery that has been in the works for over a decade down in Arizona. It says,


It takes 15 years of regulation and 3 billion dollars to build a refinery in the middle of the desert! What's wrong with this picture?

Maybe the viable solution, rather than slashing taxes and profits, would be to streamline or eliminate some of the regulation so refineries can be produced faster and cheaper.

Here is a link to my source.

This is exactly the case. A decrease in supply and an increased demand means higher prices. The amount of bad information being flotaed around these days makes it impossible to discuss this topic.

Here is the DNC's take on gas prices today:



No refineries built in almost 30 years and people put statements out like that. It is the obnoxious part of politics. Sometimes it is easier to play toward people's ignorance than to actually help solve a problem.