Friday, July 18, 2008

Eight Dollar Gas

One of the recent proposals put forth to address the condition of four-dollar-a-gallon gasoline, was to find a way to make it cost more. Some folks seem to think, if I understand the strategy, that making gasoline more expensive will force folks to stop using it. That is a singularly poor notion, however.

Gasoline is principally used to power motor vehicles, but there is also the secondary effect that gas prices affect freight and shipping costs, so inflation is also affected. With very few exceptions, people need motor vehicles to get to work and to do their jobs. It is true that people who can do so will be more inclined to take public transportation, but there are problems with the assumption that the majority of people will do so. In the first place, public transportation does not generally have the infrastructure to accommodate the majority of the population. This is why there are a limited number of bus and train routes and a limited number of transportation options. For example, a few years ago my company had an office near north I-45, while I lived in Southwest Houston. When we were moved to that office, I had to stop riding the bus to downtown and drive myself to the new office, because there was no bus route that would get me to and from work. This was deliberate by the county, because the county managed a network of toll roads which most drivers going that way used, and letting buses carry folks would cut into toll road revenue. As a result, the Harris County Toll Road Authority and the Metropolitan Transit Authority worked together for their maximum financial gain, rather than to meet the needs of Harris County and Houston’s working population. No one should expect future considerations and plans to be any different.

But, just for the argument, let’s say METRO wants to do the right thing and set up a comprehensive network for travel. What will doubling the price of gas do? Raise bus fares, of course, and so will opening up all those new routes and buying the new buses to serve them, and building all the stations and depots needed to service and maintain the buses, plus hiring and training all the additional employees to maintain and drive those buses, and to handle all the traffic. Fares will double or triple, count on it. This is because historically, public transit systems have lost money and cities and counties will not be willing to accept the size of deficit the larger fleet will promise. What will happen, in a practical perspective, is that growth of the bus fleet and route numbers will not rise to the level where the majority of the public can make effective use of buses; just as has always been the case, most working people drive themselves to work because the politically correct solutions are not practical. In many cases they are not even practicable.

Public transport having been shown to have no more substance than an Obama resume, I now address the suggestions that drivers would shift to smaller, more efficient cars, or invest in hybrids, electric cars, or the like. The problem there is that such suggestions ignore the reasons for the popularity of SUVs in the first place. I, for example, do not trust the durability of the smaller cars, nor do I intend to risk my wife in a vehicle which cannot protect her from serious injury in an accident. That is not to say that we drive the biggest cars. I drive an Accord, my wife a CR-V. In both cases the cars are strong enough to protect us from serious injury in the event we have an accident, they are solid enough to avoid damage from the rough Houston roads, and they have suitable visibility, horsepower, and maneuverability to avoid accidents and dangerous situations in the first place. On the other side of things, I have seen the Prius, for example, and no sane driver would use one in traffic, let alone buy one and chance putting his family in it. No one would drive a Fit, a Scion or a Versa. The scooters, electric cars, and the like are even more risky and dangerous, and it is a poor mind which considers economy ahead of safety.

The considerations also fail to consider the force of habit. During the 1970s, a lot of folks changed their ways when the first Oil Crisis hit, and that crisis was a lot tougher than what we face now. But things work in cycles, and if 50-cents-a-gallon gas was no more, the prices did go down for a while and the supply became easy again. That will happen here; no one should expect 2-dollar-a-gallon gas again, but prices will go down and when they do, opinion will shift from the panic being sold by extremists. Conservation and sensible engineering will always be good ideas, but folks just will not agree to be held hostage by an economic condition, at least not in America. No one will like higher prices, but folks will weigh the price against their options, and a lot of them will pay more because the alternative is still not acceptable.

You see, gasoline replaced coal and other options all those years ago, because it was cheaper, cleaner, and more convenient. For a new paradigm to replace the gasoline-driven engine, it will be necessary for the new product to be clearly superior – the notion that political pressure will be sufficient to change transportation modes across the demographic is patently absurd, and fails from the beginning presumption. Effectively doubling the pump price of gasoline through artificial attempts to affect demand for gasoline without providing an effective and attractive alternative fuel source, cannot fail to produce disastrous results. As has been discussed above, artificial manipulation of fuel prices would be incendiary in terms of inflation, would increase unemployment and slow construction and commercial growth, would make American exports more expensive and so increase the trade deficit, and provide a valid source of intense resentment against the political agents who introduced and supported the plan. There would be grounds for legal action against Congress, the reason being that government manipulation of the market for the express purpose of harming the interests of the general population would be patently unconstitutional. The only means by which the leaders of the price fixing could avoid legal consequences for their actions, would be to make gasoline a substance illegal to have in personal possession and use for personal reasons.

Given these rather obvious reasons why doubling the price of gasoline cannot possibly help the nation, one may wonder why anyone would still advocate such actions. The answer to that lies in one simple question – doubling the price of gasoline would produce huge amounts of additional revenue, but who gets all that money? The answer, plainly, is the government, playing a Robin Hood but in real life an agent of its own greed and hypocrisy. After all, given recent behavior by Congress, does anyone believe that they would allow Oil companies to keep the profits they earn? Does anyone think that Congress, having refused to cut its already swollen taxes on gasoline, would hesitate to seize the additional funds from forcing higher prices? And the only way to do that, would be for Congress to effectively nationalize the oil industry, everything from car gasoline to heating oil, to plastics to … you get the idea. Congress making sure it gets the first slice of the pie … and the second … and the third. This plan, at its heart, is poorly-disguised Socialism, lies and hypocrisy painted over with a scheme to blame working people for the greed of a politically correct Nomenklatura.

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