• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • How High Will Gas Go?

    It’s a question that seems so 2008, but it is rearing its ugly head again. The average price of a gallon is already nearing record levels and there is no relief in sight. Some areas, like Chicago, could see prices as high as five dollars a gallon by the Memorial Day. Obama would like to blame you for the high gas prices, but the root problem is his energy policy that is stifling exploration in America.

    In the aftermath of the BP disaster in the Gulf of Mexico, President Obama instituted a moratorium on drilling that killed jobs in the region. The moratorium was lifted, but the Obama Administration was still not issuing new permits, and was held in contempt of court as a result. It was a knee-jerk reaction that has resulted in lost jobs and has cost the federal government billions in lost revenue.

    Retail gasoline sales were down in the United States as concerned consumers are trying to save every penny, but as the world demand for oil increases, the price is likely to continue to rise. Instead of trying to meet that increased demand with more supply, we are getting less supply. The Obama Administration does not want us to drill in our own oceans, but he has no problems if other countries want to do the same thing.

    So far, the Administration’s energy policy is a policy that has not helped us increase supply and create jobs but instead kill jobs and cripple regional economies dependent on oil and gas production. Alternative solutions, such as special tax breaks for natural gas vehicles and subsidies for the production and consumption of electric cars does not replace the fact that American consumers demand gasoline-powered vehicles. Even with the tax credits for electric vehicles, people are not buying them. Meanwhile gas is going up and we are all feeling the pain at the pump. There is a lot the Obama Administration can do to help curb the gas prices, and there are a lot of things they should not do.

    Leaving oil reserves untapped while providing preferential treatment for nonviable alternatives is not the answer Americans need.

    Posted in Energy [slideshow_deploy]

    10 Responses to How High Will Gas Go?

    1. George Colgrove VA says:

      Gas price goes up because dollar goes down.

      Dollar goes down because the National Debt goes up.

      Treasury Department says debt needs to go up $1.6 more trillion.

      So Treasury Department wants debt to go up more, so that the dollar goes down more, so the gas prices go up more.

      Any questions?

    2. Walter Brown, Americ says:

      Well put Todd, Your article was well thought out, researched and written. Good job. George's point is a good one as well and certainly contributes to the increasing price of fuel. Considering that the rapid rise in fuel prices hasn't been seen in other sectors to the same degree, it seems the supply constraint argument is more important for the short term fluctuation.

      American foreign policy is intimately connected to economic questions and energy; it is perhaps as influential as any of the things mentioned here yet. Reliance of foreign oil and doing business with countries that feign political alliance while funding and promoting philosophies dangerous to the entire western world is not a good plan, never was.

      The transport choke points for oil coming out of the Persian Gulf are threatened as are the major oil producing fields because of the uprisings across the Arab world which are until now almost exclusively in self described US ally monarchies. We failed to demand political reform, as a contingency for doing business with the United States, when we had the opportunity, and now we are paying the price.

      The 800 lb gorilla in this equation is Islam and the antipathy for non-Muslims that resides at it's core. Islam has been on the losing side of two world wars and has somehow escaped the normal treatment of civic value realignment that happened in following WWII in Japan, Germany and Italy, none of which retain the immoral philosophies which impelled them to violence.

      The price of a product is determined by the cost of the most expensive unit of production that buyers agree to pay for. The Persian Gulf exports more than 20% of all oil exported in the world and when that region or any other region in the world and the price. Removing a Persian Gulf from this equation, a real possibility considering the potential for a Sunni-Shia civil war would produce higher oil prices than the world has ever seen, even in inflation adjusted dollars.

      When the US economy and world economies come to a grinding halt for lack of transportation energy (~95% of petroleum is consumed in transportation), necessity will overcome politics and philosophical differences regarding preferential alternative energy sources. The bottom line is that our vehicles need a liquid fuel and there is no substitute on the horizon.

      Our government has no authority to regulate energy markets or environmental issues within the states and the distortions that federal policies create are the problem. The only way to use the cause of a problem to fix the problem is by reducing its influence or better yet removing it. Considering the ninth and tenth amendments the answer seems to be clear, close the department of energy (move nuke-weapon activities to the military) and allow the markets to find the best energy solutions.

    3. Jill, California says:

      If Obama had to pay out-of-pocket to fuel up Air Force 1, we'd see gas prices drop in a hurry.

    4. Stirling, Pennsylvan says:

      I was amazed to hear Bill O'reilly (Fox News) say that the gas prices were a result of Big Oil actually setting their own price based on what they could "get away with." It's obvious to people who understand dollars peged to oil and the way the market works that our problem is due to the Feds loose money policy. If someone like Mr. O'Reily can not understand the current situation I'm sure some in his audience may not either.

    5. Bobbie says:

      ,,,and the bigger gorilla is the members of America's government that support the worlds (hatred) punishment put on America. Obama clearly loves unfair punishments put on America and her people.

    6. Lloyd Scallan (New O says:

      It's real simple. When world wide crude available supply drops, spectulators react with price increases. Oil companies buy crude, that becomes our gas, from the spot market, which in turn gets their supply from the spectulating markets. Pump prices go up when supply drops. Middle East, or more to the point, when Obama uses every "crises" to not allow on or offshore exploration and drilling to tap into U.S. crude deposits, spectulators react thus the price at the pump increases. Obama and his ilk have openly stated that "energy prices will

      necessarily skyrocket". Pump prices will continue to increase until Obama is stopped. To answer the question, $10.00 per gallon.

    7. Leon Lundquist, Dura says:

      Todd, you fell well short of seeing the Criminal Act and the High Crime that it is for Obama's Kloward Piven policies, destroying Domestic Oil! We all just look the other way while the Government tears down Industry after Industry in America. Somehow a "duh, whoops!" after America is gone is not worthy of a Think Tank like Heritage Foundation.

      I think your answer to 'how high the price of gasoline will go?' is easily found in the other Industries, where costs have 'necessarily skyrocketed.' The Education 'industry' saw costs explode times ten! And now with Student Loans as a monopoly of Government, an Elite Education costs a million dollars! Well, no. You can't have it, not for any amount of money. You can't get in the Elite School! Sorry! Besides, you could never afford it! Here's my point, Gas will go high enough to stop American Freedom. Like it has stopped American Education.

      The nice thing about gasoline, from a destructive point of view is that high gasoline multiplies the cost of everything! One cut cuts all! We are in the same place with Oil that we are with Medicine. These things are already so Overregulated that is arguable Greedy Government steals more and wastes more than the Capitalists involved! Progressives have been killing Big Oil for decades now. People don't know the hidden costs of Oil, how invisible subsidies kept American Oil low. We spent untold Trillions defending Oil. It is further unthought of how considering how useful Oil is in Industry, it seems a shame to burn it! Plastics, Petro Chemicals! But Oil used to be ten bucks a barrel!

      I think Progressive Plutocrats have an 80% Rule, that in order to not get caught, they keep their manipulations below 80%. Media Bias was 80% so that 20% of their coverage merely supported the Big Lie! We should expect Gasoline Prices to increase 80%. $7.20 per gallon!

    8. Wes in cincy says:

      From what I have read the storage facilities for oil are all full, there is no shortage.

      It is just the speculators that are doing the damage. We are so concerned about Libya but we don't get hardly any oil from there. Our future in energy is in trouble

      simply because we have a stupid president that thinks we should all drive around in go-carts and put solar panels and windmills on top of our houses. We have an

      abundance of resources, we don't need the middle east oil. We are just overloaded with politicians that are too stupid to manage anything right.

    9. Mineral says:

      All I have to say is More and more jobs are going to be lost because of the gas prices going up. I wonder if our president is A LIAR when he said he wanted to create more jobs!

    10. Juanito says:

      Well wat its all going to come down to is no ones gonna be filling up the tank no more or have any heaters or electricity running all day as we do now a luxury. Driving, lighting, heating, is all a luxury just like vacationing. seems like to me my dollar is not as good or worth spending as anyone elses dollar, so ill just keep it and walk.:-) Walking never killed anyone. Technology will draw a path eventually, it always does. Hey watever democrats or republicans decide doesnt matter.THE BUCK STOPS HERE! If no one can play nice then we simply dont play. ;-)

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×