Kicking the Gasoline Addiction

Even as the US economy seems to be turning a corner, gas prices are on the rise, and as Americans feel the pain at the pump President Obama's approval numbers are sinking.  Both sides have used gas prices as a political football in the past, blaming opponents for high prices and taking credit when prices are low.  In 2008, we'll recall, there was much talk about gas prices, and of course President Bush, supreme master of failure in the eyes of Democrats, was chiefly to blame.  Now it's Obama's turn to face the wrath of the gas-addicted public, and round and round we go.

The truth, as most economists will tell you, is that the president has little real control over gas prices.  Sure, he can tap the strategic oil reserve, and if we had a President Gingrich, we could open every square mile of offshore and wildlife preserves for drilling.  But such efforts would still have a small, and quite delayed effect, and of course they are short-sighted solutions to persistent, long-term problems.  The true fallacy of "drill baby drill" was that increased drilling could have precisely zero influence on the gas prices of 2008, or 2012 for that matter.  In reality, gas prices are controlled by the price of oil, and as this is an international market, the president has virtually no say in the matter.

In an excellent article at Business Insider,  USC marketing professor Ira Kalb argues that oil companies have been ingenious in their ability to hike prices to record levels, even in the midst of a struggling economy, all while raking in record profits, enjoying enormous tax breaks, and skirting their promises to invest in alternative energy sources.  The oil companies have convinced us, Kalb says, that they need subsidies from the government to help keep gas prices down, when in reality the price of oil is solely under their own control.  In essence, they invariably maintain an illusory shortage of their product to keep prices high, so that the money will keep rolling in and they can keep funding politicians who will protect their tax breaks.

But what can we do?  According to a 2007 study from the Department of Transportation there are approximately 254 million passenger vehicles in the United States.  The vast majority of these cars burn that sweet unleaded fuel.  And here in the US, much to the chagrin of utopians, public transportation is largely not a viable option to reduce gasoline consumption.  Sure, the big cities like New York get along quite well with a robust metro transit system, and of course public transportation seems to work well in Europe.  But we are not nearly as densely populated as Europe (for comparison, if the United States had the population density of Germany, we would have about 2.2 billion people living here instead of 313 million).  So while there are some places for which public transportation is effective, there are vast expanses of land where building trains or running buses is just not workable.

As the population expands we will need more energy.  This energy demand, short of some unimaginable global catastrophe, will never go away.  It's clear that fossil fuels, though still fairly abundant at present, are finite resources that will ultimately give out.  These resources can never be replenished on any reasonable timescale, and we are burning through millions of years' worth of carbon over the course of just a few decades.  The Earth is large, but just as a microscopic virus is capable of taking down very macroscopic creatures, so too can we have an outsized influence on the fate, and resources, of our planet.  There's no question that we are well on our way to depleting Earth of its fossil fuels. 

So why are we so reluctant to ween ourselves off this addiction that we all know has to be kicked?  We can blame myopia, inertia, vested interests in the status quo, and the comfort of the familiar.  We are like children who fail to understand that sucking a thumb, while perfectly normal as a toddler, will be totally unacceptable as an adult.  Just as children are incapable of fully understanding the world of adulthood that awaits them, so we are trapped by our own inability to see what the world will look like, say, 100 years from now.  Most of us have a rosy vision of the future, and perhaps we think it will simply appear without any effort by us or our children.  But the truth is, we build our future, and we have to start laying the foundation now.  The alternative is stark: perpetual reliance on OPEC and the like.  

You'll notice we've not even addressed the obscene effects on the environment caused by burning fossil fuels.  The tragic neglect of our planet is among the most pressing of human problems, and it must be addressed.  But a sizable portion of this country thinks climate change is a hoax.  So what will convince them it's time to get off gas?  Maybe the pain at the pump will do it.  We are slaves to the manipulated markets of oil.  Only by diversifying our energy sources can we hope to end the monopoly that eats into our pocketbook at a time when so many are struggling.  But of course you can't put a wind turbine on your car!  What's the solution?

We have to make a serious transition to electric cars.  At this stage, the plug-in hybrid, like the Volt, is probably the right way to go, because the reality is, people rely on cars for both short and long trips, and few are going to buy a car that they can only drive for 50 miles before needing several hours of charging.  Indeed, gasoline has its advantages: it's comparatively cheap for its energy content, and it takes just a couple minutes to refuel a gas-powered car.  There will probably be a place for gasoline on our energy menu for a long time.  But ultimately, if we're driving electric cars (that use gas only sporadically), we can diversify our energy resources, taking advantage of any number of alternatives.  Costs drop across the board, because we can shop around for the best technology and oil companies no longer enjoy a monopoly on the consumer's driving habits.

But we may not be able to rely on the consumer alone to make this choice.  Sure, the record of hybrid vehicles is certainly encouraging; since their wide release in 2000 with the Toyota Prius, they are somewhat commonplace today.  Nevertheless their sales make up only around 3 percent of the total market for new cars.  That number could be much higher if the government took a more active role in encouraging more fuel efficiency.  Rather than providing subsidies to oil companies -- technologies of the past -- these same subsidies could be redirected to the technologies of the future, helping consumers and car companies to make a major shift toward hybrid and plug-in hybrid vehicles.  This shift would benefit the public enormously.

Very few of us really need high performance vehicles capable of towing an airplane or reaching 200 miles per hour.  For those who do, those vehicles can stay on the market; there is no need to ban them.  But most regular commuter vehicles could be equipped with new technologies to use far less gasoline, and when people see how much less they're paying to power their vehicle, they'll be unlikely to go back.  Right now, the extra cost of hybrid or plug-in hybrid vehicles will hold back all but the socially conscious from taking the plunge; but if fuel efficiency is the standard, prices will inevitably fall.  There's nothing inherently expensive about hybrid or electric car technology; its cost is just a function of its rarity.

Gasoline is a drug to which the entire country, indeed the entire world, is addicted.  Like other drugs, its effect can be felt in the wallet, and it has demonstrably negative consequences for its users.  Like other drugs, it can be very difficult to give up.  People's whole lives may be geared around access to it.  But like other drugs, it can be kicked with enough determination.  The choice is clear: either we persist in the notion that we are at the mercy of oil pushers abroad, or we can seize the opportunity to choose our own destiny.  

Many on the right like to say that the government is too powerful, and that any government involvement with the market is dangerous.  But a democratic government like ours is in the hands of the people, and it is one of the only tools the people have to counterbalance the exploitive, runaway profit engineering of the modern corporation.  Just as we need checks and balances in our government -- a system that is much celebrated, for good reason -- we need checks and balances in the economy, and that means government must be able to influence the direction of business (it's clear that business already has a great deal of influence on the direction of politics).  We should rely on experts to craft legislation that steers, and not stifles, the market, but we must dispose of the notion that the market is a magical place that collapses as soon as you shine a light on it.  The market is just an extension of human psychology, and it carries all the foibles of the human mind along with it.

We cannot rely on corporations to change their ways out of the goodness of their heart; contrary to that familiar Romneyan trope, corporations are not people, and they don't have hearts.  We'll have to steer the change we need ourselves, and use the power of government as a means to that end.  Change may be tough, but the alternative is far worse.  The longer we drag our feet, the longer our energy supply will be subject to the whims of foreign moguls and events in hostile regions of the world.  It's time to kick the gas addiction.