People seem to be in all-out panic mode with the price of gas going up $11 in one day and with the national average now topping $4 a gallon. So what to do about it?
McCain seems hitting on the idea of a gas tax holiday to take off that 18.4 cents per gallon off of your price of gas over the summer. OK, that wll save me about $2.76 every time I fill up….on my now nearly $50 fill up. When It still only cost me $30 to fill up, saving nearly $3 may have been something significant. Now…not so much. And you wouldn’t even get the full 18.4 cents anyway, even assuming the gas companies don’t shave any off the top, because of increased demand. In the long run, that increased demand may drive up the cost of gas even more than the 18.4 cents you saved over the summer.
So basically, it doesn’t help me save much money at all, and it may ultimately push up the price of gas even more in the end. No thanks.
Cramer on the Today show this morning was yapping about how the US has to drill for more oil, but while this may provide a slight short-term respite, it’s just putting off the inevitable.
Also, adding more gas to the market basically will do the same thing as the gas holiday – lower the price just enough to make people use a lot more gas – perhaps even more gas than we’re adding to the market by drilling more. Also be prepared to hear that we should drill in ANWR again, even though it will take years to implement and wouldn’t decrease the cost of gas anyway.
The main thing I was shocked to hear, or rather shocked to not hear, this morning was any talk of massive research into alternative energy. OK, people may not like a sudden increase in spending in alternative energy, but the faster we can develope legitimate alternative sources of energy, the sooner we can ween ourselves off of oil. Unless people actually feel like paying $12 a gallon for gas the next time we have a presidential election.
The longer we use ethanol, the more we learn that it isn’t the great answer we thought it once was. It obviously isn’t reducing the price of gas as much as we’d like (though gas probably would be higher if we didn’t have it, since it makes up 3% of our gasoline supply). As Cramer notes, we use 30% of our corn to make 3% of our fuel. That obviously makes ethanol an unsustainable replacement for oil – and creating ethanol from corn is inefficient to being with (if only we had huge stocks of sugar cane).
So the only real answers appear to be: use less, and use other types of fuel. The price of gas will eventually force option #1 on many people, but we still seem very sluggish in implementing #2. Hopefully we’ll have some serious debate about this topic during the election beyond whether the gas tax holiday is a good idea or not.
