Monday, May 28, 2007

Gasoline Is Too Cheap: A Contrarian’s View

A recent poll reveals that half of all Americans believe gas should cost no more than $2.49 a gallon; another 40% believe it should not exceed $3.00 a gallon, only a statistical handful believe gasoline should cost more than $3.00 a gallon.

This is not surprising, of course. We have all been taught from the time we were propped up in front of the television set that when it comes to paying for anything, less is more.

Regrettably, “cheaper is better” ranks as something less than a universal truth. Gasoline is a good example of an exception to the rule. Indeed, I posit gasoline should cost $6.00 a gallon, perhaps more, and that would be a good thing.

Heresy? Perhaps. For sure the proposition that gasoline should double in price won’t come as good news to a nation of drivers, where jumping into a car by one’s self and driving 20 miles to work or 100 miles to see Mom and Dad in a gas-guzzler is considered as much of a “right” as speaking about it.

And, while gasoline and speech are both subject to inviolable law, they are subject to different inviolable laws. Indeed, I suspect gasoline is subject to a law that is even more inviolable than free speech. Gasoline is subject to the law of supply and demand, a law that cannot be denied, at least not for long. And, as soon as the reins come off the market, gasoline will be $6.00 a gallon.

Six dollars! Can we stand the pain? Yes, we can. Others do it everyday. I was in Belgium last year doing some management training and I was shocked to see gasoline priced over $6.00 (U.S.) a gallon. Even more shocking was that there was no wailing and gnashing of teeth, no bawling, slobbering, or whimpering, no pandering and no begging government to "do something about it!" Indeed, no one said much of anything about gasoline prices. It was just the way it was and, more importantly, people in Europe have learned to adapt. They drive less and they drive more fuel-efficient vehicles that result in the use of less gasoline. The use of less gasoline, over the long term, exerts downward pressure on pricing – you remember, that pesky law of supply and demand?

To the contrary, our seeming obsession to hold down the price of gasoline will have the opposite effect. Lower prices will increase demand and put upward pressure on prices. Moreover, the longer we keep the lid on the pressure cooker of gasoline prices and our finger stuck in the relief valve, the more assured the coming explosion will be severe, dramatic and tragic. In a nation that pays homage to the “free market,” this one should have been obvious.

Finally, consider there is one more law, or better said “principle,” that demands gasoline cost more, not less. It is a principle even more important to our welfare than “get it cheap now.” It is a principle that recognizes diminishing commodities that come from the earth are not ours for the taking but ours to use for the “common good,” a value of democratic society that somehow got lost in the virtue of selfishness. It is a value that includes the best interest not of just us, but of our children and their children and so on. It is a very old principle, one the Lakota Indians articulated as follows: “The world is not a gift from our parents but is on loan to us from our children.”

A wise friend, Carl Hammerschlag, who lived the first half of his life with the Indians interprets this to mean that we owe to our children a world at least as good as we found it. To leave it as good as we found it means to leave it clean and to leave some for them. Some of what? Some of everything.

My generation and the ones who have followed have done a disturbingly poor job with that thing called fossil fuels, ignoring their diminishing quantity, their lack of renewability, and their impact on the environment we are leaving to our progeny.

A suggestion: While we cannot right all of the wrongs generated through greed and avarice, perhaps we should at least throw those a bone to those who are to follow us here and belly up the bar where a gallon of gas reflects not just the price of oil and the cost of cracking it into gasoline, but the cost of a diminishing, vanishing resource which future generations will need if only to buy enough time to replace it.


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