Congress's Plans to Lower Gas Prices Won't Do Squat
Between the efforts to push five or so offshore drilling bills that considered in Congress over the last few weeks, there's been no shortage of posturing about "fighting" high oil prices. Some of these bills have even been touted by the GOP as "solutions" to high gas prices -- their supporters claimed that if only oil companies were allowed to drill more, those prices would magically fall. Even more absurd is the notion that Obama's drilling policies are too strict, and are keeping prices high -- this logic was employed in an effort to reduce the amount of environmental review required for new drilling projects (before we've even finished cleaning up the disastrous BP spill). Democrats, meanwhile, imply that oil companies' greed is behind high gas prices, and the handsome annual subsidies they receive from Uncle Sam should be stricken down.
But all of this bickering is little more than political opportunism: Neither banishing subsidies nor expanding drilling will have any significant impact on gas prices. Yet neither Congress nor the president has the guts to come clean and tackle the cold hard truth:Gas prices are going to keep going up. Even if we opened up all of America's coastlines to offshore drilling, even by 2030 we'd only theoretically succeed at lowering gas prices by mere pennies. And that's according to the conservative-leaning Energy Information Administration. And for that matter, subsidies have little bearing on gas prices either.
The Atlantic's Derek Thompson has this nice chart that explains what actually impacts the price of gas:
As you can see, what truly impacts the price of gas is supply and demand -- and a wide variety of experts, from oil analysts to Saudi officials to peak oil specialists, now believe we've hit or are about to hit peak oil. Or we did a few years ago. Meanwhile, demand is booming, as China, India, and Brazil grow at a rapid clip. Supply shrinks, demand booms -- what do you think happens next?
Congress, and the Obama administration need to be straightforward with the American public. We're not going to drill our way out of this mess. And no, Big Oil does not deserve nor need those subsidies. But the biggest issue is that the era of cheap gas is over. If Americans are angry at $4 a gallon gas, they're certainly to be super pissed when it hits $5, $6 a gallon after such 'solutions' like expanded drilling fail, and Big Oil continues to reap massive profits despite fewer subsidies.
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