Saturday, September 24, 2005

Gas prices are coming back up after hurricane Rita. There was a brief respite after the national average hit close to $3.00 around September 5th. Prices had recently dropped to $2.78 nationwide. There appears to already be a run on gas with people trying to fill up their tanks before prices rise again.

I am actually a fan of high gas prices. I hope that the high prices at the pump will drive people away from SUVs and minivans. It should also put pressure on manufacturers to put more emphasis on fuel consumption and less on engine performance requirements. Manufacturers just make what Americans demand. Even so, it will take a decade or more to have a large impact on fuel consumption as older cars are progressively replaced by newer, more efficient models.

Americans seem to have taken cheap gasoline as a right. They blame higher prices on price gouging and OPEC, not on simple rules of supply and demand. I wouldn't mind a stiff federal gasoline tax to keep prices high after the current crisis subsides. Transportation makes up 60% of American oil use and America uses the lions share of global oil production. As America comes under increasing pressure for foreign energy sources, we need to to compromise personal freedom to gas-guzzle for increased nation security of our energy supply. The first step towards this goal is more fuel efficient vehicles, while ultimately we will need alternative sources of energy to fulfill our immense demand for energy.

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