The Pain of Inflated Gas Prices Offers an Opportunity

Gas prices are up. It’s impossible not to notice. The national average cost of a gallon of gas has reached $3.79, and prices are even higher in places like California. But, it doesn’t have to be this way. Alternative energy solutions must be found.

Everyone is feeling the pinch, even those who don’t drive, as higher gas prices increase the prices of virtually everything else, since the more it costs to transport something, the more consumers end up paying for it. This does, however, raise two very important questions: Why are gas prices so high? And, what should be done about it?

There is no single answer to what has inflated gas prices so much, but there are a few causes that can be easily identified. It’s no secret that much of the oil that is imported into this country comes from the Middle East. It’s also well known that whenever there is a conflict in this area of the world, gas prices go up, whether this unrest actually has any effect on oil supplies or not. Recent conflicts in Egypt, Syria, and Libya have all contributed to price hikes, as has the escalating tension with Iran and their threats to close the Strait of Hormuz, a strategic waterway through which about 20% of the world’s oil is shipped. The fear that access to oil will be limited sends gas prices through the roof.

Another contributor to inflated prices can be found here in America, and like most economic issues, the blame lies with Wall Street. Traders and speculators have played a key role in gas price hikes. Both Forbes and Goldman Sachs have estimated that rampant speculation has added more than $.50 to the cost of each gallon of gas.  This artificial inflation has only served to take money out of working people’s pockets and give it over to bankers. There are provisions in the recent Dodd-Frank Act that are supposed to limit oil speculation, but they have largely been ignored.

It’s simple to say that gas prices could be lowered by resolving Middle Eastern conflict and enforcing financial regulations, but neither of these things are simple. Another suggestion would be to increase domestic supplies, an idea that has been adopted by Republicans with their “Drill, baby, drill” mentality and their continued push to build a pipeline that would bring oil from Canada to refineries in the United States.

These are short-term solutions, however, and focus on the wrong part of the supply and demand problem. Increasing production may lower prices temporarily, but it will also increase oil dependency. There is a finite supply of oil in the world, even if a large amount of it remains untapped. If current oil consumption habits continue, a time will come when this supply is exhausted, but the demand for energy will remain.

So, a better solution would be to shift the focus toward alternative energy sources like solar, wind, biofuels, and even nuclear power. Alternative energy has the added benefit of being cleaner than oil. The government gives oil companies billions of dollars in subsidies, while they rake in billions in profits. If these subsidies were directed towards alternative and renewable energy resources, they would help America reduce its addiction to oil, while also ensuring that future generations will have the fuel sources they will need, since there would be no worry about supply dwindling.

Gas prices are a problem, but they are a short-term problem in need of a long-term solution.

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