PHOENIX - Each Sunday, ABC15.com debuts an Arizona issue - along with two opposing sides on the topic.
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This week we’re tackling the debate on what needs to happen in order for gas prices to drop significantly.
Linda Gorman, director of communications and public affairs at AAA Arizona, says our leaders must work together to implement a long-term, comprehensive energy policy, which includes the development and use of safe, efficient and reliable alternative fuels and energy.
Colin Tetreault, senior policy advisor to the Mayor of Phoenix Greg Stanton, says citizens may need to shift priorities away from driving internal combustion automobiles and radically adopt alternative methods of movement in order to lower the demand.
Click “next page” to read the first of two positions, “ We must make some big changes ”.
“We must make some big changes”: By Colin Tetreault, senior policy advisor to the Mayor of Phoenix Greg Stanton
How do we, as a local, national, and global society address the concerns of rising gasoline prices? The short answer: make some big changes. While there are deeper contexts to each (tradeoffs, externalities, environmental implications, et cetera) there are some basic choices that we, as a nation, could plausibly advance to affect the price of gasoline in a dramatic manner.
First, an understanding that gasoline is a global commodity is necessary. If we won’t buy it, someone else will. Second, the rate of gasoline consumption/demand (86-88 million barrels/day) is rising on a global basis. Third, the rate of global production (86-88 million barrels/day) has remained relatively constant.
Let’s recall some of the fundamentals of economic theory: supply and demand. If supply remains constant while demand increases…we get higher prices. We see this playing out in our own backyard; Arizona has added over 1 million vehicles to the road in the past ten years. Even in the midst of our nations’ greatest economic recession, other gasoline consuming countries (e.g. China & India) have continued to increase consumption at a prodigious rate. More people desiring and using gas with a fixed supply equates to higher prices.
Here are some options – some of which may be sweet and some of which may sting – that could help drive the cost of gasoline down:
- Want $2.50 per gallon gasoline? Have the federal government write a $187 billion/year check to subsidize the costs passed on to the consumer. Some back of the envelope calculations are sobering in a recent article by The Atlantic.
- Allow 244 million citizens (16 years and older) to shift priorities away from driving internal combustion automobiles and radically adopt alternate methods of movement. A recent Gallup poll indicates that the median response of Americans won’t drastically alter their lifestyle until gas reaches $5.30/gallon. Let’s spend $100/per person/per year on an “education program” to encourage alternative methods of movement; it will only cost another $24.4 billion/year.
- Let’s get serious about funding and advancing technologies for efficiency and alternatives to the internal combustion engine. Current CAFE standards for passenger cars are 27.5 mpg and are slated to hit 40.1 and 49.6 mpg in 2021 and 2025, respectively. How can we enable and encourage our automotive manufacturers to not only embrace, but fervently champion the implementation of radically more efficient technologies? We have been able to previously rise to the challenge of creating innovative solutions to paramount concerns; let’s do it again. Additionally, we need to invest in providing an alternative technology to the now antiquated internal combustion engine. Why limit the suite of options available to help move people, ideas, and goods?
- Lastly, the exciting and controversial option: increase domestic supply. The simple solution of increasing available domestic supply (where we can have better influence on prices) will bring down overall price at the pump. We would have to go at it full-bore (quickly) to make an impact. If we don’t wean ourselves off of a foreign supply market, we leave ourselves vulnerable to a globally priced commodity. If we desire greater stability, domestic production is a plausible solution. Granted, this is not without some very serious environmental implications.
Fundamentally, I think that the questions need to shift from “how do we lower gas prices” to “how do we enable a system that can transport people, goods, and ideas?” We deserve a transportation system that is high performing, affordable, accessible, and environmentally responsible. By focusing more on the outcomes we desire –getting us where we want to go, increasing equity, reducing risk/uncertainty in transportation – we can find more ingenious solutions than my final recommendation:
Want to lower the price of gasoline by 50-percent? Start selling it by the half-gallon.
Do you agree with this opinion? Add a comment below to sound off.
Click “next page” to read the second position, “ Long -term energy policy essential to curbing crude addiction”
“Long -term energy policy essential to curbing crude addiction”: By Linda Gorman, director of communications and public affairs at AAA Arizona
In order to drive down the cost of fuel from multiyear highs, the United States must address the underlying issues related to high gas prices, starting with crude oil. The cost of crude oil is one of the most influential factors when it comes to the price of gasoline. In fact, the commodity accounts for well over half the cost of each gallon of fuel.
In recent years, a variety of factors have placed a higher price tag on crude oil, some of the most influential being overblown market speculation and geopolitical conflicts in oil-sensitive regions of the world. However, one factor packs a heavier punch and grows stronger every day: global demand.
World demand for oil has been on the rise in recent years, as an increasing number of consumers in developing countries have parked their bicycles and other modes of transportation in favor of the automobile. While the U.S. remains the world’s largest consumer of oil, the appetite for the product in countries around the globe is steadily increasing and, in some cases, outpacing U.S. demand growth.
According to the Energy Information Administration, U.S. demand for oil is down 7 percent from last year, while consumption in China is up by more than 5 percent. China is also outpacing the U.S. when it comes to new car sales. According to IHS Global Insight, last year Americans bought nearly 13 million cars, yet nearly 18 million cars were sold in China. In fact, by 2016 U.S. auto sales are forecasted to be around 16.5 million, while China auto sales are estimated to be nearly 27 million.
Growing global appetite, coupled with other aforementioned factors, has added volatility to the price of crude oil. Consequently, this volatility is reflected in the price consumers pay at the pump as well as in the increased costs of other goods and services.
Another point that bears mentioning: Politicization of gas prices is a common occurrence during times of high fuel prices, especially during an election year. However, before taking a politically charged position on this issue, consider this: If President Obama is to blame for current fuel prices, President Bush would also be responsible for the price spike of 2008, during which the national fuel average reached its highest price ever, spending 46 days above $4 gallon and 168 days above the $3.50 mark. The factors responsible for the price of fuel are much more complex than the person who holds the title of commander in chief.
As an advocacy organization representing more than 825,000 motorists in Arizona and 52 million motorists across the country, AAA believes that the development of a long-term, comprehensive energy policy is essential to reducing market volatility. The result of doing so would ultimately create a more reliable market for consumers.
Unfortunately, there is no silver bullet solution or quick fix to create this policy. AAA maintains that a solution will require a multipronged approach that should include, but not be limited to:
- Fuel economy standards that require the commitment of auto manufacturers to continued, marked improvements in fuel efficiency, while ensuring passenger safety and consumer choice are not compromised.
- The development and use of safe, efficient and reliable alternative fuels and energy.
- Increased environmentally appropriate domestic oil production.
- Conservation programs calling for ride sharing, increased use of mass transportation, adherence to speed limits, and the proper maintenance of vehicles to reduce fuel consumption.
- Participation on all levels, from national and state leaders to automakers and motorists, which will likely prove to be the most difficult component of this endeavor.
It has never been more important for our leaders to put the interests of Americans first. That’s why AAA urges our leaders to work together to implement a long-term, comprehensive energy policy that targets the key issues related to high gas prices. Until this happens, the price of fuel will continue to be dictated by a commodity that is plagued by increasing global demand and volatility.
Do you agree with this opinion? Add a comment below to sound off.
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