Lower gas prices wouldn’t be as good as they sound

George Kelley’s letter (“Like oil and water,” Aug. 27, Reporter) demanding that the American public pressure congressional representatives to begin immediate offshore (and land) drilling in order to lower the record high gas prices is perhaps well-intentioned, but very misguided and prone to oversimplification.

George Kelley’s letter (“Like oil and water,” Aug. 27, Reporter) demanding that the American public pressure congressional representatives to begin immediate offshore (and land) drilling in order to lower the record high gas prices is perhaps well-intentioned, but very misguided and prone to oversimplification.

It is true that everyone is having to make tough decisions about household budgets, cut back on unnecessary driving, and use alternate commuting options like ride-sharing, public transportation, or even bicycle. Simply calling for increased drilling isn’t going to solve anything, however, in the short-run especially.

Oil is a global commodity, subject to supply and demand on a global scale, and even assuming the immediate availability of oil from offshore drilling platforms, the price would fluctuate very little, if at all, based on the increased supply. China, India and other modernizing countries are catching up to our incredible thirst for oil, and world demand is at record levels.

Even then, Mr. Kelley is wrong to claim that “the oil that is pumped out of the ground today can be shipped to our refineries today.” Of course he is correct in a literal sense, but unfortunately the “10 years” figure he is quoting as being how long opponents of drilling say this process will take is not the time it will take to get extracted oil from the platform to the pump, but the time oil industry analysts say it will take to plot, plan, assemble the drilling stations and create the infrastructure to transport the oil once it flows. Once all this is completed, only then can the oil flow and be delivered to refineries.

Furthermore, Mr. Kelley’s desire to see the current gasoline tax rates reduced would be both counterproductive to drivers and dangerous as well. With the high cost of gas and the U.S.’s record low gasoline tax rates compared to the rest of the developed world, the government is already collecting less revenues from gas taxes due to reduced demand – and transportation infrastructure, the primary beneficiary of gasoline tax revenue, is dangerously underfunded.

Automobile transportation is heavily subsidized by the government, and to eliminate or reduce one of the the most rational methods of funding, the infrastructure would only serve to force the government to find the funds elsewhere.

Secondly, economists correctly state that a reduction of the gas tax would do little to reduce the price of gasoline to the consumer. If a good is in high demand, people are willing to pay a certain price for it based on that level of demand. Do any of you think about how much of the money you spend on gasoline is tax revenue and how much is the actual cost of the product? Or do you just consider the price on the sign? Eliminate a portion of the price due to a reduction in taxation and demand is going to increase based on the lower price, and by the time everything levels out, prices will be at the same level as before. However, instead of the government having funds to maintain and improve the transportation infrastructure required for driving, the oil companies have pocketed the difference.

It’s understandable that people are upset about the high cost of gasoline right now. However, it is disturbing to see so many people looking for quick fixes and buying into false rhetoric designed not to find solutions but to distract and misinform.

Research into alternative energy, mandatory improvements in fuel efficiency standards, and increased mass transportation infrastructure are going to be required components of any plan that looks to free us from the tyranny of oil dependence, but that is not to say we must refrain from tapping the oil available to us. However, we must do so with an understanding that increased domestic production is not a panacea and will do nothing in the short term, and there are massive environmental risks that need to be taken in to consideration. I will leave you with a quote:

“Clearly, drilling is not the solution to our oil dependence, but any serious energy proposal has to be comprehensive and include more oil supply and production off the outer continental shelf.”

– Robbie Diamond, president and founder of Securing America’s Future Energy, a nonpartisan group committed to reducing the nation’s dependence on oil.