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Friday, May 9, 2008

How Much Higher Will (or Should) Gas Go?

Ann-Marie Luciano

Those of us who drive to get to work every day (I drive from Frederick County to DC every day) have had to face the agony of seeing how much more money it takes to fill up our tank every time we go to the gas station. The average price for the East Coast is $3.61 a gallon this week, which is up from $1.78 a gallon from the beginning of 2005.

Just when you think that the realization that gas has more than doubled in a little over three years is bad enough, the news outlets bombard you with the alarming projections that gas prices will continue to increase with no end in sight. On Tuesday, the Energy Department predicted that the price of gasoline would peak in June to $3.73 a gallon. Iran's oil minister just announced yesterday that the price of crude oil could rise to $200 a barrel "in the near future" (from an all-time high of $124 a barrel now).

Of course, the knee-jerk reaction most of us (and most politicians) have to this news is to ask when the gas prices will stop increasing and how we can make them stop. In a move many deemed as pure political pandering, John McCain and Hillary Clinton announced proposals to institute a "gas tax holiday" this summer which would temporarily eliminate the 18.4 cents a gallon tax on gas. Given the fact that gas prices will already have increased by more than 18.4 cents by this summer, and the fact that oil companies may simply charge higher prices if they are going to be taxed with the burden of paying for the holiday (under Clinton's plan), many critics deemed the plans "pointless."

Obama, in a move that perhaps positively helped distinguish him from Clinton in Tuesday's primaries, has opposed the "gas tax holiday" idea, stating in a report by Reuters: "It would last for three months and it would save you on average half a tank of gas, $25 to $30. That's what Senator Clinton and Senator McCain are proposing to deal with the gas crisis." This isn't an idea designed to get you through the summer, it's an idea designed to get them through an election." Instead, Obama's proposal to deal with high gas prices is to suspend the purchase of oil for Strategic Petroleum Reserve, raise fuel efficiency standards and support biodiesel and clean energy technology.

Despite my own selfish wishes and habits (I do drive a Prius, but I drive to DC because I insist on driving rather than taking the train), I find myself repelled from any proposal that will only incentivize us to continue with the same unsustainable habits we have been used to for so long. As many are recognizing, America's addiction to oil is not just an environmental problem -- it's a national security problem. We heavily rely on oil from unstable, foreign sources, and if those sources were to dry up (either due to political reasons or due to peak oil (to be a future blog story)) almost everything in our country would either slow down or come to a grinding halt (after we run out of our reserves, of course). As Obama and many other politicians are proposing, the solution lies in making us less dependent on oil for energy, whether that be in the form of increased fuel efficiency standards and/or an increase in alternative energy sources.

Therefore, from the perspective of what's best for the environment and America's energy independence, the ever-increasing price of gas actually may be a good thing. The Energy Information Administration predicts that the increases in prices we've been seeing, coupled with the overall economic slow down, will result in a decrease in daily oil consumption by 190,000 barrels (last month they forecasted a 90,000 barrels a day decrease) for 2008. Dare I say, isn't this good news?

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