Tuesday, January 12, 2016

$2 or $4 gas - Which is better?

I have a serious question: Which is better for Americans, $2 gas or $4 gas?

I heard just a bit of a politician talking about our need to reduce Saudi oil production since this is keeping prices low.

This is a huge and complex worldwide issue so I’d like to pose some serious questions.

When gas is low, people travel more. Good. But more exhaust, bad. Tourism jobs are up. But jobs go away in places like the Bakken oil fields in North Dakota. But many folks decry the methods of finding and producing American oil (fracking for instance) so less production, less environmental damage. No need to argue about the pipeline (except of course to move Canadian shale oil down to southern U.S refineries.

Detroit (as a stand-in for the auto industry at large) sells more SUVs and larger trucks when gas is cheap. Good for that economic recovery and more (mostly) American jobs in production. Good for auto-makers since these are higher margin vehicles. Bad for the environment as the collective MPGs of these is lower. Means that automakers have to balance their fleets to meet Federal standards for their overall production lines. Fewer sales of hybrids and all electrics since the costs to buy far outweigh any future fuel savings. Bad for makers and possibly future bad for the environment.

Cheap gas, means the Saudis have more leverage overall in the geopolitical scene. Good on one sense in that they are perceived as a stabilizing force in the region. If their government were to topple, nobody really knows what might happen. But since they also support a particular Sunni brand of Islam, called Wahhabi, and fund the madrassas across the world where this is taught and ends up producing even more terrorists or radicals, bad.

But keeping the Saudis strong means Iran does not (yet) become a controlling geopolitical force. Good.

I’d really like to see some side-by-wide comparisons of what happens to jobs and our economy at both high-and-low gas prices; A U.S. comparison. Then a what-if geopolitical chart showing the impact of rising or falling oil prices on various countries and scenarios.

Personally, I like being able to fill my tank for less than $20. But if I need to pay a higher price to keep our economy stable and keep more Americans employed, then I’m willing to do that.

I know the U.S. has a strategic oil reserve that occasionally we tap. If we can subsidize corn producers to help encourage ethanol, is it possible to subsidize U.S. oil production and stockpile as much oil as possible for a possible future crisis or price hike? I know the idea that an oil company should be subsidized seems odd but worth thinking about if it would keep some Americans employed and help us prepare for a future event.