Students at UC Riverside have always been more sensitive to the pressures of the pump than average college students. Every day hordes of commuters drive from every corner of Southern California to Riverside, guzzling thousands of gallons of gas in the process. As oil prices, expensive even in the best of times, spike to an all-time seasonal high, thousands of student commuters are likely questioning whether they can afford to make the daily trips at all.
As of Saturday, Feb. 25, the price of a barrel of oil stood at $109.62 and the average price of a gallon of unleaded gas at around $3.67. By the time this article is published, both these numbers will undoubtedly be higher. In California we already pay 60 cents more per gallon than the national average and nearly 80 cents more than we did just two months ago. All of this in what is traditionally the low season for gas prices. What’s going on?
Unfortunately a price hike on the most traded commodity in the world is rarely attributable to any one factor, and this particular crisis is no exception. Some of these factors defy an easy resolution; others may be impossible for policymakers to influence at all. Nevertheless, decisions made by political leaders both in the Obama Administration and in preceding years paved the way for the recent spike in prices.
First, the big picture: oil, like any nature resource, is a scarce commodity. Once we burn those hydrocarbons they’re gone for good (unless we’re willing to wait a few million years). Although new technologies are constantly uncovering vast new oil and natural gas fields, the methods necessary for their extraction are often many orders of magnitude more expensive than what was required 20 or 30 years ago when oil was often found closer to the surface. Coupled with the inescapable reality that we will eventually exhaust Earth’s fossil fuel reserves, it is inevitable that gas prices will continue to rise, albeit at a manageable pace.
Oil is also notoriously prone to trouble during foreign policy crises, and the impending conflict with Iran over its nuclear ambitions is no exception. The sanctions placed on Iranian petroleum products in fact cut both ways, increasing the scarcity of crude in the West and consequently raising its value. Additionally, Iranian threats to blockade the Strait of Hormuz, through which flows almost 40 percent of the world’s petroleum, proved convincing enough that speculators felt compelled to increase prices. Should a shooting war break out (now more a question of “when” than “if”), prices will skyrocket to a place that makes the current crisis look tame in comparison.
But although scarcity and international conflict go a long way towards explaining the pain at the pump, they don’t tell the whole story. The monetary and energy policies of this nation also deserve some of the blame, as do the politicians and bureaucrats who conceived them. In an effort to stimulate spending and halt a free-falling housing market, the Obama Administration and the Federal Reserve threw hundreds of billions of dollars into the American economy through bailouts and “quantitative easing,” known more commonly as “printing money.”
These policies were successful in producing inflation, which is great if your home is underwater or you’re drowning in debt. What inflation doesn’t do so well is control the price of commodities such as metals, groceries and, yes, oil. Without concurrent economic growth, an increase in monetary supply is destined to increase the cost of commodities across the board. Tellingly, the last time oil was priced this high was May of 2008, when the American economy was vastly over-inflated, not by government spending, but by the proliferation of junk bonds in the stock market.
More important than inflation in fueling this crisis, however, is our political class’s stubborn refusal to pursue American energy independence. For those of you unfamiliar with political code-speak, I’m talking about drilling on American soil. From the hysteria over ANWR ten years ago to the current Keystone Pipeline debacle, politicians (overwhelmingly Democrats) have successfully blocked even the smallest reforms aimed at increasing the supply of fossil fuels directly available to the United States.
Professing to care about our future, these charlatans constantly patronized us small-minded folk who think only of the present. “It will take 10 years to see any oil if we start drilling tomorrow,” they told us. “A decade from now we’ll be flying around in clean-emission hydrogen cars and using solar power to heat our hot tubs. Why build a lot of outdated, wasteful infrastructure and harm the planet at the same time?”
That was 10 years ago. Today green energy is no less of a pipe dream than it was the previous decade, and we use more fossil fuels than ever before. The environment is no better off for lack of American drilling. We damage our oceans and atmosphere by transporting unconscionable amounts of hydrocarbons from the Middle East and allowing nations with less-stringent environmental controls, such as Brazil or Nigeria, to do our drilling dirty work for us. And of course, the lack of a sufficient domestic supply has sent energy prices through the roof.
To our political class, and especially to the current administration, all this pain is for our own good. President Obama’s energy policy is openly designed to make energy prices so onerous Americans will consume cheaper, less-wasteful green energy instead. The plan succeeded in raising prices but failed to create the necessary technology and infrastructure required for green energy to be affordable and workable. The results of such a cynical and short-sighted policy are plain to see.
The price of gas is destined to rise regardless. However, distinguishing what’s beyond our control from what’s in our power to change is crucial if the effects of skyrocketing energy costs are to be contained. Voters, especially young ones whose daily commute to campus is quickly becoming unaffordable, should reject the bogus trade-off between exploration for fossil fuels and a clean environment and do everything they can to elect policymakers who understand that energy independence is no longer just an option.