Yesterday, the national average for the price of gasoline dropped yet again, this time to about $3.69/gallon.
But lest anyone think that since the oil bubble has popped that the energy crisis is over, think again. This is only the beginning.
A big part of what has helped the price of gasoline to drop is the anticipated increase in supply that would occur if the current Congressional moratoria on off-shore drilling and natural gas and oil shale exploration are finally allowed to expire. That means that Congress still has a role to play in either helping to push down prices even more, or in causing them to rise again.
Should Congress reauthorize the current bans on off-shore drilling, natural gas and oil shale exploration, markets will adjust. Prices will rise once more. Those markets are looking very closely at what Congress does or does not do next on energy.
Politicians may not like that, and they can bluster all they want about “overspeculation” but the fact remains that Congress has control over a significant portion of America’s oil reserves. When government acts to restrict supply in such gargantuan ways, there will almost always be an impact on prices upward. But, if they now act to open up those supplies, prices will come down. It’s the simple laws of supply and demand.
Perhaps what they don’t like is that there are real, negative economic consequences for misguided Big Government policies.
Of course, with prices currently dropping, the risk is that politicians will think they have dodged a bullet and no longer need to act. They need to think again.
Americans understand that the price shock of 2008 is a warning of what will happen economically if global energy supplies cannot keep up with global demand. They view this as a long-term problem, and that is why they want to increase the nation’s long-term supply by increasing production.
In fact, prices are still pretty high. $3.69/gallon for gasoline is not cheap. Nor will $3.50, $3.00, or even $2.75 be considered “cheap”. Congress needs to act to make certain that energy will plentiful and at the lowest possible cost so that the American economy is not hampered over the next thirty years. It can start by simply allowing the off-shore drilling and natural gas and oil shale exploration moratoria to expire on October 1st.
