Friday — March 12, 2004

No one should be shocked at gas prices

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Drivers who were shocked when they found prices at the gas pump were more than $2 a gallon this week haven’t been paying attention.

Let’s see.

The U.S. cut taxes, went to war in Iraq, ran up a record deficit and the value of the dollar fell. Oil-producing nations are paid for their oil in dollars. With dollars worth less, even though oil-producing nations are selling more oil this year than last, the dollars they are paid for the oil are not worth as much.

So, not wishing to suffer the slings and arrows of the American economy, the friendly OPEC nations recently decided to raise the price of a barrel of crude and cut production.

Bingo. Gas stations all over the world reset their pumps, and OPEC countries stopped worrying, settled back on their comfy cushions and ordered a nice lunch.

Some economic observers, mostly stock analysts, have tried to reassure investors by insisting that the increase in oil prices is really OK because the U.S. seems to be absorbing it well. It’s absorbing it well, they say, because the U.S. economy is growing and is not as dependent on manufacturing as it used to be. It’s not as dependent on manufacturing because said factories have been moved offshore where higher gas prices are offset by the puny wages they pay.

Now, that’s reassuring.

In the same breath, they express confidence that somehow the U.S. will dodge the consequences of higher gas prices and that the rate of economic growth will not fall—as it has when this has happened before. Can speeches about how the Easter Bunny is real be far behind?

Apparently, these guys haven’t talked to the folks at the pumps who suddenly found that the cost of their commute just doubled and that a big chunk of their tax cut evaporated like gas fumes.

The hike will be hard on commuters, but they shouldn’t have been shocked. Gas prices have spiked before, and they will spike again. It’s what happens between spikes that’s important.

And in the U.S., not a lot has ever happened. Perversely, Americans have behaved as though cheap oil would be around forever.

Each year, the size of the cars we buy has gone up, and the gas mileage has gone down. We have allowed our cities to be designed for the car and to be ruled by the car. Our homes lie far from our jobs and our cities have been designed for driving, not walking or cycling. We have allowed our government to neglect research into alternative fuels.

It’s all been just fine with us.

Perhaps after we finish turning our pockets inside out at the pumps, we should settle down to a nice cold dinner of crow.

The Idaho Mountain Express is distributed free to residents and guests throughout the Sun Valley, Idaho resort area community. Subscribers to the Idaho Mountain Express will read these stories and others in this week's issue.