Oil

Cross posted on my Xanga site, another "active blog".

Today, gasoline at Costco was $2.99.99 for a gallon.
Many people think big oil is to blame and are angry that their profits are rising.
Well, if we want to lower the price of we have two choices:

1. Find more oil

2. Use less oil

Ok, there is a third, do some of both.

If we are serious about number 1, we will allow drilling in Alaska, allow drilling off the coast of California and Florida and in Colorado. All have oil reserves but those reserves have not been allowed to be tapped for environmental reasons.

PLEASE NOTE I DID NOT SAY THE REASONS WERE GOOD OR BAD, BUT THOSE ARE THE REASONS. Sorry for the shouting but the above send many environmentalists into a tizzy and wanted to hopefully prevent someone spamming me.

If we want more supply that is where the oil is. If we (as a society) are not willing to increase supply then we shouldn't complain about the price of oil.

If we are serious about number 2, we will repeal some of the restrictive laws such as seatbelts for each passenger and encourage families to use mopeds for travel. Impossible for 4 people to ride on a moped you say? Its done daily in parts of Asia, Africa and South & Central America. Too risky? Well there is a trade off between safety and oil usage.

For those who say force the car companies to build smaller cars, well they do offer smaller cars, which car did you buy last? Small cars are available but if we don't buy them the auto companies are less likely to build them. Don't like small cars because they are under powered and unsafe in an accident? Well there is a trade off between the size of a car and the amount of steel it has in it and the chance of not getting killed in an accident. When a Mini Cooper and Ford Excursion meet, the Ford wins.

From what I've seen on the road so far, many people are picking the safety of larger cars over smaller cars because they value the lives of their families over the expense of gas. That is the market place at work. If gas rises to $5.00 a gallon (or more in Europe), then people will start to change their habits when purchasing new cars. Already people are buying fewer SUV's then in prior years so the market is working (and GM and Ford are hurting because most of their profits came from the large SUVs).

For people who say we need to be energy independent then we will have cheap oil, I'll I can say is dream on. Norway is an oil exporter. Gasoline there is over US$8.00 a gallon. Part of the cost is the tax but the locals still pay the world price for oil, else the oil producers will sell their oil to someone else. If the government puts a price cap on the price of oil, then we will have a return to the gas lines of the early 1970s. Price controls will lead to shortages, they always have.

So higher prices will be with us for a while, how do we solve it? Find more oil or use less?