a new era of high energy costs

The gas price has become high. On Sunday, when I filled up my Honda accord gas tank, the bill was a whopping $43 at $4.09 per gallon on the regular. My other SUV which requires premium gas cost more than $80 to fill up. I protect. The gas price at this level is disruptive to my life.

In the past 20 years, the gasoline price has been largely low and stable. This environment made people forget that oil had been a scare and non-renewable natural resource. I came to this country 22 years ago. Gasoline was below one dollar per gallon then. Sometimes, the gas stations gave 2 glasses as gifts to customers who filled up their tanks. Afterwards, the gasoline prices rose to $1 plus change, $2 plus change and $3 plus change.

A low and stable gasoline price contributed to the economic expansions. Suburbs mushroomed around cities. People began to build larger and larger houses. One can generally guess the year in which the neighborhood was built by the sized of the houses. The bigger the size, the later in years in which those houses were built. More and more people relied on driving for almost everything they do. Their vehicles became larger and larger – SUVs and sometimes just trucks. A low gasoline price was responsible for this wasteful life style.

On the other hand, a low gas price inhibited the development of the public transportations. Nowadays, for many living in the suburban areas, buses and commuter trains are off limit. A low gas price also removed incentives for industries to deploy and market energy conservation technologies. We know that many car manufactures have had some gas efficient designs for many years. The gas mileages for cars have remained unchanged for the past 20 years.

While we generally believe that a free market is the most efficient form of economy, we also know that a sudden price upswing in a key component in people’s daily life and the economy may become disruptive. The oil shock in the 70s was a good example.

Last week, in response to growing public and political pressure over soaring gasoline prices, President Bush said the Federal Trade Commission (FTC), U.S. Department of Justice and the U.S. Energy Department are conducting inquires into illegal manipulation of gasoline prices. In addition, the FTC and the U.S. Attorney General are contacting all 50 state attorneys general to urge them to also investigate possible market manipulation.

While welcoming the government interventions, I also believe the government has to do much more. The oil shock in the 70s was a politically motivated event. But this current oil price hike has profound reasons. Most of the world oil reserves have been discovered. The chance of finding another major oil reservoir is small. In the mean while, the world oil demand has been steadily rising along with the growth of the world economy, especially the BRIC countries. We have entered a new era of high energy costs.

It is high time for the government to change its long standing practice by permitting offshore drilling near the US shore lines and in the state of Alaska. By announcing such an intention, the US government will be able to bring down the oil prices in the world markets.

In the long run, governments and people all over the world should be encouraged to engage in energy conservation and exploring alternate energy sources. We will all have to drive less in smaller cars, put up with less heating in winter and air conditioning in summer. We will have to develop a habit of turning on and off the lights as we enter and leaving the rooms. We all will do whatever we can to save a bundle here and there.

Imaging soon, our highways will have only half of today’s traffic, imaging half of the cars on roads will be outfitted with natural gas tubes, hybrid engines or just outright electrical, what a leisurely and clean world we all will be in! Oil prices will once again be at 99 cents per gallon. But who will care by then?

There are news reports that some companies and schools are considering let students and workers work on a 4 day per week schedule. Not a bad idea. I would like to add that 5 day a week telecommuting is an even better option. In stead of spending 3 hours behind a steering wheel a day, I will be kicking and jumping in my back yard. I can use the time to play tennis, golf; I can go to the gym everyday instead once a week; I can go fishing, boating or tan on the Spring Lake beaches; I will not miss my favorite TV series or a newly releases movies; I will be able to eat 3 meals with my family; I will never have to leave dishes unwashed after breakfast; I can attend more job training classes and become more productive for my employer. I am looking forward to that day.