September 30, 2006
By Ben Lieberman
up can go down. That's certainly proved true with gasoline
had moved in only one direction -- up -- since January, from $2.20
per gallon to more than $3 by July. But since mid-August, they have
been falling by more than a penny per day, and the fast decline is
likely to continue.
this is great news for the driving public and the American economy
overall, the drop at the pump does raise questions about whether
Congress will take still-needed steps to strengthen America's
factors affect the price of gasoline, and until recently most have
been working in the direction of higher costs. Rising oil prices,
boosted by strong demand and geopolitical uncertainty over imports,
have been the biggest factor. Concerns about hurricane damage and
the new federal ethanol mandate also have added to the upward
the middle of August, the worst was over. Oil prices started to
soften as fears of Iran-related supply disruptions eased. The
market also benefited from the absence of any serious hurricanes
like last year's Katrina, which devastated oil production in the
Gulf of Mexico. And ethanol, which experienced a massive price
spike after the law requiring the use of this fuel additive took
effect early this year, has finally come down in price.
summer is over, demand slackens and the tough seasonal
environmental specifications for fuel are no longer in effect.
Thus, barring a major geopolitical event, further declines are
likely in the weeks ahead.
good news not only for car owners, but also for incumbent office
holders facing an angry electorate in November. Gas prices will
still hurt them, but not nearly as much, thanks to the decline, and
especially so if prices dip well below $2.50 before election day,
which looks increasingly likely.
dark cloud to all of this is what it may mean for congressional
efforts to expand domestic oil production. This includes measures
to open up a small portion of Alaska's Arctic National Wildlife
Refuge (ANWR), America's largest untapped onshore oil
Geological Survey estimates that ANWR contains 10 billion barrels
of oil, enough to increase known domestic reserves by 50 percent.
And there is even more energy potential in America's territorial
waters, 85 percent of which, like ANWR, is currently off limits to
oil and natural-gas production. Bills to allow at least some
additional offshore energy production (the House version is much
stronger than the Senate version) are currently pending.
temporary drop in prices is nice, but fundamentally little has
changed and the underlying problems that created $3 gas can and
probably will return unless we do something about it. Specifically,
the tightness of world supplies and ongoing political instability
among many oil-exporting nations underscores the need for America
to make fuller use of the oil it has here at home. But it remains
to be seen whether the prospects for energy legislation will
decline along with pump prices.
gas prices are a source of savings for hard-pressed consumers, and
a source of relief for politicians facing reelection. But let's
hope they don't feed complacency about the need to address the
nation's future energy needs.
Ben Lieberman is
a senior policy analyst at The Heritage Foundation (heritage.org),
a Washington-based public policy research institute.
First appeared in FOXNews.com
Prices had moved in only one direction -- up -- since January, from $2.20 per gallon to more than $3 by July. But since mid-August, they have been falling by more than a penny per day, and the fast decline is likely to continue.
Senior Policy Analyst, Energy and Environment
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