From the Charlotte Observer (Gas prices ...) is an update on gas prices and the political response:
Charlotte stations were averaging $3.18 for a gallon of regular, down two pennies from the weekend, according to AAA. The region still outpaced the nation by 14 cents. Normally, Charlotte averages about 8 cents less. Charlotte-area prices are 65 cents higher than before Katrina.
...
On Capitol Hill, the Senate Energy and Natural Resources Committee became the first of at least four congressional panels to hold gas-price hearings. The House Energy and Commerce Committee will hear from witnesses today.
Members of the Senate committee -- including Richard Burr, R-N.C. -- also called witnesses from federal agencies and industry and consumer groups. But senators spent much of the day leveling blame for the high pump prices.
Democrats cited the greed of oil companies and failure of the Bush administration to protect consumers. Several Republicans blamed federal environmental regulations, and said a moratorium against most offshore drilling -- including near the Carolinas -- makes the country too dependent on Gulf Coast drilling.
Both Dems and Repubs are getting it wrong. Gas prices are high because of an actual supply decrease AND expectations of a prolonged supply decrease fueled a demand increase (I better fill 'er up now!).
The Democratic response is wrong. Protecting consumers means keeping prices low. Keeping prices low with a supply decrease creates a shortage and a reduction in gas being sold by producers, exacerbating the problem (Democratic politicians exacerbate a lot of problems by trying to help consumers).
The first Republication response is wrong. Environmental regulations are designed to fix negative externality, er, pollution problems. Regulations raise prices, reduce consumption and reduce pollution. The price spike had nothing to do with the regs. (Except for maybe the many types of gasoline required across states, which makes it more difficult for reduced refinery capacity to supply all states with the required type of gas. Maybe this is what the article is referring to, but I doubt it).
The second Republican response is wrong. Oil prices are set by world demand and supply. ANWR and Atlantic coast oil would not affect the world price. Opening up ANWR and the Atlantic coast to oil drilling would make some money for oil companies, angering Dems, but it wouldn't help avoid a gas price spike. (Republican politicians exacerbate a lot of problems by trying to help business).
In fact the high prices worked, and are working, exactly as they should. In the face of a supply decrease, we'd like the reduced supply to flow to its most highly valued use. Say, commuters should have gas for driving to work and cruisers should cut back on their joy-riding. This is exactly what happenend this past weekend via the price spike. Conservation of gas would not have occured if the Dems and Repubs implored us to drive less while the price remained low.
Note:
In another article the CO reports that buses are filling up (CATS ...):
Park-and-ride lots are fuller, and so are the buses as drivers look for ways to save money with gas prices averaging $3.18 for a gallon of regular.
Charlotte Area Transit System's ridership has been increasing about 5 percent annually, but last year it jumped by 8.2 percent. Transit chief Ron Tober largely credits this year's spurt to higher gas prices, which are $1 a gallon higher than last year.
Just to make sure you noticed, at least in Charlotte, the bus trend started last year as gas prices rose by 40% or so.
Agreed with your main points, but I'm surprised at the anectodal evidence (here in Austin too) of increased bus use - even here with our VERY low fares (25-50c one way typically), it doesn't seem to make economical sense to leave a car at home (once you already own the car, that is).
I wrote about what I thought it would take to get suburbanites on the bus, and it was closer to $10/gallon: http://mdahmus.thebaba.com/blog/archives/000139.html
Posted by: M1EK | September 08, 2005 at 09:37 AM