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The free market model tells us that there is another way to reduce gasoline prices of course: instead of decreasing demand, we can increase supply. America has the ability to do so, and to do so to a larger degree than any other nation in the world, for the constraints to increasing production in this country are not geological or technical, but rather self-imposed and political. Those constraints can be cast off by the stroke of a pen, the market would quickly respond and everyone would be the richer.
Instead, we choose a kind of economic self-flagellation, deluding ourselves to believe that if we use less cheap, abundant fossil fuels then a planet supposedly in desperate danger will be saved. The facts tell us something quite different. For, as the years go by, our continued reductions in fossil fuel use are less and less significant in the global scheme of things.
Let’s go back to that benchmark year of 2005. Since then, United States’ consumption has dropped from about 7.6 billion barrels per year of crude, to less than 6.9 billion barrels per year, a reduction of over 650 million barrels per year. At the same time, crude oil consumption in China and India increased by over 700 million barrels per year. While it would be foolish and selfish to deny the peoples of China and India the opportunity to raise their standards of living by telling them that they can’t use more oil, it’s equally foolish to attempt to maintain the world’s level of petroleum consumption at a constant level on the back of American consumers. Yet, that is exactly what we have been doing, in effect if not in name. Rather than using our talents and resources to increase supply, we have been drawn into a decades-long, increasingly futile effort to micro-manage domestic demand. It’s a program destined to fail – designed to fail – and American consumers are paying the price at the pump for this failed energy policy every day. Unless and until we have an administration that can deal with the reality of energy production in the twenty first century, rather than the delusional fantasies that our current president is so in love with, five dollar per gallon gas will be upon us in astonishingly short order.
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