Similar to politicians from the past, President Obama, is pointing fingers at bogeymen for causing higher gas prices. In the past it has been toward people like me for driving an SUV, or non-hybrid mini-van. Last week Obama created a task force to root out fraudulent speculators. Whether speculators are fraudulent or can impact the price of gas I will leave unanswered here, but speculation about who is impacting the price of gas should include a much broader list. Here are a few of the bogeyman that play a role:
CO2 emissions would increase the price of energy, gas included. In addition, though verbally fostering increased oil development within the U.S., in his weekly address he suggested that “[i]nstead of subsidizing yesterday’s energy sources, we need to invest in tomorrow’s.” I am not a great supporter of subsidies of any sort. Nonetheless, reducing subsidies to the oil industry is not going to have the implied result of reduced gas prices. And, importantly, politically determined investments have not proven economically or environmentally efficient; think ethanol.
Therein sits a basic model of supply and demand. Global demand has increased causing an increase in price. Supply, or production, has not kept pace with the rising demand. Regardless of who is blamed, the bottom line is that gas prices respond to supply and demand.
Given the push by the president to move toward alternative energy sources and reduce CO2 emissions, lower gas prices are not in his favor; lower emissions and lower gas prices are incongruous. Politicians claiming to strive for both are subject to being called oxymoronic.