This was a paper that I wrote for college. You'll noticed that I included by sources for those who think I'm making stuff up.
Yeah... Got a 28 out of a possible 30 points for it and only because I was a little vague about why I think that we need to drill for our own oil, but I'm getting ahead of the story. Enjoy.
"Knowldege is power." - Sir Francis Bacon
Gas prices have been on a more or less steady rise since 2009 and are believed to reach an all time average high soon (Gas Price Historical Price Charts, 2011). Many Americans are wondering why the average price for gasoline is on a steady rise and what can we do to fix this growing problem.
As of today, April 28, 2011, the national average price for gasoline ranges from $3.886 per gallon for regular unleaded gas to as much as $4.156 per gallon for premium gas (Daily Fuel Gauge Report--national, state and local average prices for gasoline, diesel and E-85, 2011).
In 2008, our last increase and fall in gasoline prices, the popular belief that gas prices were rising was due to greed in the oil producing companies. A later analysis provided the real reason: a belief by speculators that there was an international shortage of oil, thereby creating an increase in the value of oil due to simple supply and demand. According to CNN Money’s Steve Hargreaves, “Strong demand, tight supplies and a volatile marketplace have attracted the interest of investors [speculators] - the last main contributor to high prices” (Hargreaves, 2008).
Fast forward to today.
One belief for the increase in gasoline prices in the United States is the oil-drilling moratorium that President Obama had set in May 2010 limiting where oil-drilling companies could drill for oil. Another belief is that the oil producing companies are being overly greedy once again. Yet another belief is that this increase in gasoline prices are somehow being manipulated by those in the federal government who want to force us into more environmentally friendly modes of transportation such as hybrid/electric cars, mass transit, or biking/walking to and from work.
What can be done? Are there no ideas of how to decrease gasoline prices?
Both the Democrat and Republican parties in Washington, D.C. have proposed some answers, which Hannah Madans, a reporter for the Annenberg: an on line news organization for the University of Southern California, writes about.
“1. Invest in new forms of energy” (Madans, 2011)
There is a growing popular belief that oil is running low. The more we take from the earth, the less there will be for future generations. There is a growing concern that we will eventually deplete the earth of all sources of oil. Even nuclear power, which is sustainable for generations, is being thought of as an insufficient answer to our quest for sources of energy due to the inherent risks with nuclear power plants as seen in recent times in Japan with the Fukushima Power Plant. These concerns have been leading some to think that we need to look into new forms of energy such as solar power, wind power, and natural gas. If America were able to develop such alternative sources of energy, it would make us less dependent on energy sources like oil, thus lowering the demand for oil, which in turn should decrease its monetary value and therefore lower its price. Also, thinking in terms of alternative sources of energy, such lines of thought have lead some to rethink how we power our automobiles. Electric cars and hybrid cars that run on both gasoline and electricity have become more and more popular as science and technology have caught up with the current thinking of different forms of energy. As with the general search for alternative sources of energy, alternative ways to power our cars should decrease the demand for gasoline, which in turn should decrease its monetary value and therefore lower gasoline prices. Those that are opposed to searching for alternative sources of power argue that these alternative sources of power will do very little to help with the near term issue of inflated gasoline prices. They also believe that such sources of power will not be enough to support America’s energy needs.
“2. Create a national energy policy” (Madans, 2011)
This would mean that there would be laws generated with the end goal to make energy in general more affordable.
“3. End subsidies for oil and gas firms” (Madans, 2011)
The Democrat Party supports this: the Republican Party opposes it. It calls for an end in tax breaks on the oil producing companies, thereby increasing the amount of taxes collected by the federal government. The idea is that the increased federal revenue would go towards federal loans/grants that would be paid out to those who are researching and developing the aforementioned alternative energy sources. Republicans oppose this tax increase, as they believe that the increase in taxes will only be passed on to consumers, thus further increasing the already bloated price of gasoline.
“4. Give the Justice Department task force power and strict punishments to impose” (Madans, 2011)
The Justice Department has launched a task force whose purpose is to investigate fraud in the oil market such as illegal trading, which has a tendency to increase gasoline prices. If they find such fraud, then the Justice Department should have the power to enact punishment.
“5. Increase domestic oil production and drilling” (Madans, 2011)
“Drill baby drill” became a catch phrase used by the Republican Party during the 2008 Presidential Election campaign. It began in support of increasing America’s ability to explore for and to drill for our own oil, thus making us less dependent on other nations for our oil needs and ultimately, our gasoline production. The thought was that drilling for our own oil would at least decrease the price of our gasoline as more oil for gasoline production would be available. This is something that most Democrats and environmentalist oppose. They argue that drilling for oil will do harm to the environment and will do little to help lower gasoline prices, but they also forget that this has worked in the past.
On July 14, 2008, the Associated Press reported that then President George W. Bush was going to lift a ban on drilling for oil that day that was set by his father, President George H. W. Bush in 1990 (President Bush lifts executive ban on offshore drilling, 2008). Looking at historical data, national gasoline prices average $4.12 for regular unleaded gasoline just before President Bush announces that he will lift the ban on drilling for oil. Remarkably, the average price for gasoline falls to $1.61 in five short months (Gas Price Historical Price Charts, 2011).
So the question remains, what do we do to lower the average price of gasoline?
Again, as history shows, drilling for our own oil seems to be the best near term solution to our ever-increasing average gasoline prices. More oil should equate to lower gasoline prices. While no citizen outside of the federal government has the power to repeal a ban on oil exploration/drilling, we do have a voice. Contacting your representatives in Congress should get the ball rolling.
Gas prices have been on a more or less steady rise since 2009 and are believed to reach an all time average high soon. Many Americans are wondering why the average price for gasoline is on a steady rise and what can we do to fix this growing problem. The best near term solution offered to date seems to be to increase our ability to drill for our own oil.
Bibliography
Daily Fuel Gauge Report--national, state and local average prices for gasoline, diesel and E-85. (2011, April 28). Retrieved April 28, 2011, from AAA: http://fuelgaugereport.aaa.com/?redirectto=http://fuelgaugereport.opisnet.com/index.asp
Gas Price Historical Price Charts. (2011, April 29). Retrieved April 29, 2011, from GasBuddy.com: http://www.GasBuddy.com/gb_retail_price_chart.aspx?city1=USA Average&city2=&city3=&crude=n&tme=48&units=us
Hargreaves, S. (2008, May 22). Why gas prices have gone from 90 cents to $4 a gallon. Retrieved April 28, 2011, from CNNMoney.com: http://money.cnn.com/2008/05/20/news/economy/gas_price_history/index.htm
Madans, H. (2011, April 28). Gas Prices: Five Ways Feds Could Lower Them. Retrieved April 29, 2011, from Neon Tommy Annenberg Digital News: http://www.neontommy.com/news/2011/04/steps-bring-down-gas-prices
President Bush lifts executive ban on offshore drilling. (2008, July 14). Retrieved April 29, 2011, from NYDailyNews.com: http://www.nydailynews.com/news/national/2008/07/14/2008-07-14_president_bush_lifts_executive_ban_on_of.html
