6 Things We Can Do in the Face of Soaring Gas Prices
- Frances Beinecke
- President of NRDC, New York City
- Blog | About
- Posted June 12, 2008 in Moving Beyond Oil , Solving Global Warming
I recently drove to the Adirondack Mountains in Upstate New York and felt the $4 sticker shock so many Americans are now feeling at the pump. There is no doubt that soaring gas prices are making hard economic times even harder. The question is what can we do about it.
Plenty of pundits have jumped in with their miracle solution. Senators McCain and Clinton called for a gas tax holiday. Newt Gingrich is suggesting we drill our way out of this fix.
The truth is many factors influence the price of gas, including growing demand in China and India, the weak dollar, and the flight of capital to oil futures. No single approach can unravel this complex, global tangle. But here are a few steps that can help.
Don’t Drill for Oil in Exceptional Wild Places
America is home to 3 percent of global oil supply. That’s right: 3 percent. We cannot drill our way to cheaper oil prices--our piece of the pie is far too small to have any impact on the global market. Taking oil from pristine wilderness landscapes like the Arctic National Wildlife Refuge would be just a drop in the bucket.
- There is less than a year’s supply of oil in the Arctic Refuge, and it would take 5 to 10 years to access it.
- Increasing fuel efficiency standards for new vehicles to 40 miles per gallon would save more than 10 times the likely yield of oil from the Arctic Refuge.
Would you rather degrade the irreplaceable refuge to get 3 to 4 cents of relief from higher gas prices in 5 years, or would you prefer to spend those 5 years encouraging Detroit to make more efficient cars and employing Americans in clean energy jobs. Fortunately the latter got even easier this past year when Congress required automakers to build cars and trucks that average at least 35 MPG by 2020. All we have to do is raise the fuel-efficiency bar a little higher.
Drive Down Demand
We may only have only 3 percent of the global oil supply, but we account for about 25 percent of the demand. That is our best tool for lowering oil prices. The only way OPEC will get the message that we are serious about these prices is if we slash our 20 million-barrel-a-day habit. With more efficient cars, plug-in hybrid-electric vehicles, and homegrown biofuels, OPEC’s biggest customer won’t be so beholden any more. For more details, listen to my colleague Deron Lovaas's appearance on NPR's Diane Rehm show.
Diversify Our Energy Sources
At some point the multiple forces that feed rising oil prices will stabilize and prices will go down. A little bit. For awhile. And then they will rise again. Given the complexity of the market, it is inevitable. An indispensable, long-term route off of the gas-price rollercoaster is to diversity our energy sources. Fuels made from plant materials instead of petroleum can help free Americans from our dependence on volatile markets and hostile or unreliable foreign oil sources. Plus, homegrown biofuels--if they are grown right--can curb global warming and help American farmers.
Reduce the Trade Deficit by Ending Our Addiction to Oil
Like most addicts, we are caught in a vicious cycle. The declining value of the dollar has pushed up the cost of crude oil, yet it is our addiction to oil that increases our trade deficit and lowers the value of the dollar. A staggering 85 percent of our trade deficit is made up of car and oil imports. Imagine if US auto makers produced a car that used little or no gas that Americans would buy. It would wipe out our trade deficit at once.
Don’t Forget that Oil Companies Are Profiting Substantially
The oil industry’s PR machine has been trying to persuade Americans that it is suffering just like everybody else. Consider the charts that been widely used to show where your gasoline dollars are going. The graphics depict how much money goes to crude oil prices, taxes, and refineries, but there is literally no space for oil company profit. You would think these companies are providing their product for free. I don’t buy it, especially given the fact that oil companies are sitting on huge crude reserves. Instead of releasing some of those reserves, they are watching prices--and profits--rise.
For example, ExxonMobil’s oil reserves were valued at about $300 billion four years ago. Under current prices they are worth more than $1 trillion. Why aren’t they using their eye-popping profits to develop more energy choices for Americans?
Pass Global Warming Legislation
Last week, the Senate missed an excellent opportunity to drive down gas prices when they failed to pass the Lieberman-Warner Climate Security Act. Under the act, the amount of money consumers pay for transportation fuel would have dropped over time because the policy promotes greater fuel efficiency and alternative fuels. Right now the oil industry has a monopoly over our transportation dollars, but they won’t be able to charge as much if they’re not the only game in town. Federal global warming legislation will diversify our energy supply, focus on efficiency not consumption, and could cut our oil imports by half trillion dollars in the next 25 years.
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Comments
Mike T. — Jun 12 2008 04:13 PM
I think you should make it "7 things". Take a look at GasBankUSA located at http://www.gasbankusa.com. The site talks about fixed price gasoline and locking in a fixed price.
Sue — Jun 12 2008 05:25 PM
I'm rather fond of Green with a gun's solution (to reduce demand) --stop driving! Don't go on vacation or take pleasure trips even short ones, review all trips and do only the absolutely essential ones, planning them to accomplish the most with the least mileage, use alternatives (walking, biking, public transit) whenever possible.
Dan Troutman — Jun 12 2008 09:44 PM
Here's something you won't see in the press: Congress mandates increased vehicle efficiency standards - 100,000 to lose their lives in auto collisions!
Do you really want to trust your life to a small plastic eggcrate? You can't violate the laws of physics. I seriously doubt that the planned mini-hybrids will be fabricated with titanium or carbon composite materials - it would be unaffordable to the general public!! The best the middle class can hope for is a modern Model-T - something light, with a small engine, very little range or useful payload.
How ironic that the Chinese are clamoring for bigger autos and SUVs while America is going back to bicycles and mopeds!? I hear China has several million slightly-used bicycles, rickshaws and mopeds they'd like to get rid of! :)
I'll buy the first electric / hybid vehicle that can pull a 15,000 lb trailer. Until then, I'll stick with my pickup truck and suburban to haul my farm/ranch goods to market to help feed America.
Change NOW — Jun 13 2008 02:19 PM
the farmer hauling his ranch goods to market obviously needs his truck, so do contractors, etc...duh.....the overwhelming majority driving SUVs do not, the old lady at walmart, the nascar lover who might one day have to pull his racecar....etc...they are paying the price, the rest of us should not have to, the feds need to stop subsidizing detroit, and innovation ONLY will lead to lower gas prices....
Change NOW — Jun 13 2008 02:33 PM
"Here's something you won't see in the press: Congress mandates increased vehicle efficiency standards - 100,000 to lose their lives in auto collisions!..."
everybody's life is in danger even innocent bystanders when you have huge hulking behemoths huring down the road at you by overcompensating morons w/tiny pee pees......who have a grudge against others who is edukatid.......
if everybody rode a bike, would the bike be dangerous to everybody else???? think about it.....
I especially love the hummer driver doing fifty now to save gas!!!!!
and the walmart commercial w/the exasperated suv owner filling up to drive across town to "save money" at walmart....
Adamant — Jun 13 2008 07:08 PM
We have had so many years to prepare for this time but so little to show for it in terms of advanced vehicles. Look at any magazine rack and you'll still find the objects of our desires are still monster trucks and 600-1000 horsepower supercars that make absolutely no sense in today's world (or yesterday's world for that matter). Instead of a sane and sensible transition to more efficient vehicles, we have opted by default for a wrenching and difficult era where we scramble to find buyers who want our Suburbans and Excalades (I read of a guy who used one for a septic tank- probably their highest use these days).
Dan Troutman — Jun 15 2008 11:13 PM
There is something seriously wrong with the "pay more to take longer to do less" philosophy of a lot of the "green" movements. Who can afford a $75,000 electric vehicle (55mph, 200 mile range, 500lb useful payload)?
Every new transportation system has offered TIME savings over the one it replaced. Jets > propeller aircraft > trains > autos > horse/buggy > bicycle > walking. Think about it!
When you get down to it - TIME is MONEY!
America needs a new transportation system that moves people and goods at 300mph minimum! As a nuclear physicist and part time inventor I'm working on an electric/mag-lev system oriented to the average American commuter. Such a system needs to be constructed in the current interstate highway corridors. Can you imagine the "I gotta get me one of those!" comments when commuters chugging along at 30-45mph in their hybrid autos get a look at those folks traveling at 300mph+ on their way to work!?
Design a zero-emission HIGH-SPEED computer controlled transportation system!
Offering a substantial performance benefit is the only way for Americans to quickly adopt and pay for a new transportation system (whatever form it takes.) Going slower and being more expensive is literally a "waste of time."
Robert Coker — Jun 16 2008 12:54 PM
Honda Motor Corp built a 60 mpg car almost twenty years ago called a CRX HF. It will run 80 mph on the highway, is well built, and my dad has racked up 378,000 miles on his since he purchased it new. Point being.. fuel efficiency is not a "new" technology.. making use of it has just has gained new popularity. Mr Troutman's message of improved (or just existent) public transportation is representative of innovation/technology.
As a second point, the oil industry is the only "public utility" that is not regulated. Is this not ironic? Electricity is regulated. Water is regulated. Natural gas is regulated.
How the oil companies literally gouge the American people without any recourse? Hello.... is ANYONE is Washington, DC listening... I say "No taxation without representation". The oil industry (not just OPEC) is undermining the health and security of the USA.
Robert Coker — Jun 16 2008 02:14 PM
Denmark has a solution to the energy crisis and chronic disease.. Bicycles and public transportation.. It works fantastic. Another byproduct is beautiful people who live a long, healty life.
Robert Tynes — Jun 17 2008 12:29 PM
Denmark also has 70% taxes on every unit of currency. This in turn subsidises the public transportation among other things. While the PT is great, people are not able to afford cars, even if they wanted, or needed them.
Max Petrosky — Jun 18 2008 08:53 PM
We can efficiently drill in ANWR by just putting pipe lines throughout the reserve. ANWR is estimated to have more oil than all of the Middle East. Please, where do you get this information that ANWR has "less than a year" of oil supply? It is guaranteed to have 100 years of oil supply for the U.S. In that time, we can find an alternative fuel source. Drill Here. Drill Now. Pay Less. I think Chuck Norris knows what he's talking about.
Luke Tonachel — Jun 19 2008 12:47 PM
Greetings, Luke Tonachel here from NRDC. As Frances says, drilling in the Arctic would have no impact on prices for at least 5 years, and if peak production levels were reached you’d likely see less than a 3 cents/gallon change at the gas pump. These estimates come straight from the Bush Administration's Department of Energy analysis -- see http://www.eia.doe.gov/oiaf/servicerpt/anwr/index.html. There’s a better way to cut the pain at the pump. By properly maintaining your car and driving sensibly, you can cut your annual fuel bill by $200 or more starting now. Check out http://www.fueleconomy.gov/feg/drive.shtml. Switching your car to a more fuel-efficient model could easily save more. Also, reducing oil consumption through better efficiency cuts the global warming pollution that contributes to climate change.