The price lies

This week in class, we are reading about energy policy and how, in a democracy, policy has to appeal to the majority of people.  This causes a big problem when the majority of people don’t see there being an energy crisis – when we are having one.  And people want cheap gas so much they cannot see the cost.

We trust that there is a market reflecting supply and demand working in the background of our gas purchases.  Our gas prices have remained somewhat steady (or at least only tripled over the last ten years), therefore we must not be facing any shortages.  In reality, there is less and less oil available every day – it is a finite commodity – a fossil fuel.  And, that oil is more and more expensive to get to.  So, why don’t the prices we pay reflect that?

Lopsided subsidies.

Companies get paid ridiculous amounts from the federal government to drill and mine fossil fuels.  They get paid much less to harness cleaner or renewable energies.  (There’s this pesky myth about large solar subsidies circulating that is just plain false.)  They get paid to drill or not drill from their reserves.  They get paid for not shipping oil overseas to refine it and back to the US for sales (an inefficient process), they get paid for every step of the process.  Good Magazine created this image to illustrate the situation.

This graph is only partial, because it doesn’t contain the costs of maintaining our highway and road infrastructure – and doesn’t contain the military costs of assuring international supply.

Confused values

Low gas prices are considered patriotic, a virtue.  This Valentine’s Day, one man was considered a hero for founding a nonprofit with the intent of getting gas stations to sell gas for less – for $2.14 this holiday.  Never mind the fact that station owner’s profit is only pennies on the gallon.  Or that the $.80 per gallon difference may have made more sense being given to someone who truly needed it.  All that matters is low gas prices so we can continue to drive our cars as much as we want.


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