Tuesday, June 05, 2007

Our National Foolishness about Gas Prices

Gas prices are not too high. They are too low. To get perspective, we have just now reached the real price of gas (inflation adjusted) that we had back in 1981 at its historical high point. People have been focused on the price at the pump and have forgotten how that relates to total income now and in the past. High gas prices throughout recent decades would have long ago been integrated into personal spending, and the economy as a whole would have been fine.

We should have put a big tax on gas 25 or 30 years ago, and we would not be in the mess we are in now. That money could have financed health care for all and provided other benefits for the poor and the general welfare, encouraged mass transit, and financed the search for alternative fuels, and on and on.

Low gas prices have encouraged big, powerful, cars with low MPG, has made the government and the auto industry complacent about increasing fuel efficiency and the quest for alternative energy sources, has polluted the environment, increased global warming, built a commuting society dependent on long drives and congested highways, and increased our dependence on hostile or repressive governments like Saudi Arabia.

The problem with democracy -- ours anyway -- is that it does not deal well with the future. Our citizens are too focused on immediate gratification and self-interest. They respond best to the problems of the present that affect them personally. To ask them to take future generations into account is a tough assignment. This presentism is eagerly aided and abetted by politicians running for office whose time span is limited by the next election. We respond best to big issues in times of crisis when the signs of coming disasters cannot be avoided.

My own senior Senator Chuck Schumer is once more beating the drums against the high profits of oil companies, but he has no solutions that can be translated into legislation that will work and hence sounds demagogic.

The following graph shows that oil companies are not chief among sinners but have profit margins only slightly above the industry average.
The image “http://www.conocophillips.com/NR/rdonlyres/D6FBF1A1-06A3-4EB9-8E37-5CFA495A32EF/0/ProfitsOilVsOtherIndust3rdQ2006.gif” cannot be displayed, because it contains errors.

"By percentage of total revenue, banking is consistently the most profitable industry in America, followed closely by the drug industry."
Washington Post , October 28, 2005.

This is not at to deny that oil companies, like other large corporations, seek to employ strategies that increase their profits. I am no defender of big business but a severe critic. But let us analyze by the facts and not by the gut. Oil companies make huge profits in dollar terms, but they are huge companies. Profit margin is a better indicator.

By now -- had we acted wisely in the past -- we would have cars that get 100 MPH and alternative fuels that would be easing our way beyond the carbon age.

The question is when things get bad enough to force us to act to avoid imminent disaster, whether we will have enough time and sufficient resources to avert global climate catastrophes, and international conflict and chaos as all the big polluters --like us, China, and India -- continue to evade their responsibility and engage in futile blame games.

Of course, given our past foolishness, the poor who are dependent on gas to get to work are suffering and need relief. I have no sympathy for the affluent and their huge SUV's who surround me and block my fuel-efficient Prius every time I park in public places. I get my revenge when they take their GGG's (Gargantuan Gas Guzzlers) to the gas station and cry, while I laugh all the way to the bank in my Prius -- 44 or more MPG in the city.

And, yes, I am an anti-establishment, green, tree-hugging, politically radical elitist. But I also worry about the future of my grandchildren and the poor everywhere now and their grandchildren.


No comments: