American consumers spent an additional $105 million per day in 2004 for gasoline compared to 2003, according to the congressional report.
While it flies in the face of capitalism to suggest a corporation should cut back on revenues, the current situation has all the makings of a national crisis.
"The extraordinary high price of fuel means that cost reduction has gone beyond urgent," Giovanni Bisignani, director-general and CEO of the International Air Transport Association, told Business Week. "Fuel — the Fifth Horseman of the Apocalypse — is the biggest factor forcing the structural change and efficiency our industry desperately needs."
Mark Cliffe, the global head of economics and strategy at ING in London, told the magazine that Katrina's effect "probably the most serious challenge we face to growth since the Iraq war." Consumers will have to steel themselves to the fact that gas prices aren't going to come down, he added.
High gas prices not only affect consumers at the pump. They also contribute to higher heating costs. Sen. Tom Harkin (D-IA) urged Bush to release $900 million for the Low Income Home Energy Assistance Program so needy people will be able to pay their heating bills this winter.
And higher gas prices affect the transportation industry — air and trucking costs, for example — which not only mean higher air ticket prices, but likely also higher costs for consumer items reliant on shipping.
The Senate Committee on Energy and Natural Resources will meet Tuesday to discuss gas prices and the global impact. Harkin spokesperson Maureen Knightly said the meeting was moved up from later in the week.
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The Bush administration has opened emergency oil stockpiles — a step Bush has previously said he would only do at a time of "national emergency." And European allies late last week pledged to send 30 million barrels of oil and gasoline from their emergency supplies to the United States to help bridge short-term supply disruptions.
But those are only short-term responses designed to prevent gas prices from surging even higher. Neither step will result in the lowering of prices. Neither will any continued discussion of opening up oil drilling in Alaska or national parks elsewhere in the U.S. — even if such steps were taken, consumers wouldn't see the results for several years.
The only answer is for Bush to be a leader, and put the interests of the average American ahead of his OPEC and corporate friends.
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This article first appeared at Journalists Against Bush's B.S.
Article comments
1 - SFC Ski
Many people discuss the supply of crude oil without mentioning that it also needs to be refined into gasoline. It seems to my inexpert view that the prices would be reduced if the was greater refining capability. Anyone have some real educated input for or against this?
2 - RedTard
Great post. Just for your useless knowledge file, the standard "barrel" of oil is equivalent to 42 gallons and refined makes 19 gallons of gasoline, 11 gallons of fuel oil, 4 gallons of jet fuel, and a few gallons of other product.
The underlying cost has only went up $1.00/gallon yet refined products have went up at least double that. I suspect there is at least 60-80 cents worth of additional company profit being added on each gallon compared to a few years ago.
3 - RedTard
Continue to fear and the government, both right and left, will continue to take away your rights in your "best interest".
4 - Dave Nalle
Wrong again, David. Bush should not do anything to push down oil prices. In fact, he should smack a good fat $1.00 tax per gallon on top of them, and allow each state to add another 50 cents of its own. That money can go to the deficit or rebuilding Louisiana, or to subsidize building some refineries to open up that bottleneck.
A high price for gas is what we need right now to get over the hump in the production and distribution of hybrid and altertnative fuel vehicles. They are out there, but the manufacturers need proof there's consumer demand for them so that they'll step up production, and skyrocketing gas prices - the higher the better - are exactly the motivation people need to demand these vehicles.
Dave
5 - David R. Mark
Dave, your suggestion would kill the economy.
I agree that hybrids and other alternative fuel vehicles should be pushed onto the market. The problem is that Bush has coddled the Big Three in Detroit -- every president does -- so once again, American automakers have fallen behind their foreign competitors.
Toyota has 10 hybrid models on the market. Honda also has several. Meanwhile, Bush has talked about having to study the issue (specifically hydrogen-powered cars) for several more years. And the Big Three have a limited number of hybrids available, and they aren't being pushed the way, say, the new Honda Accord hybrid is.
But pushing for hybrids and other alternative fuel vehicles and trying to be proactive about gas prices are not mutually exclusive things.
6 - JR
If high gas prices would kill the economy, then this economy needs to be replaced with a sustainable one. Might as well do that now, rather than stick a patch on it and put the fundamental problem off for later (like we did with Saddam Hussein and New Orleans).
7 - David R. Mark
I'm shocked at the responses. I mean, I expect people to disagree, but I (perhaps naively) thought that people would want Bush to stand up to OPEC and big oil companies.
Hmmm.
8 - Dave Nalle
>>But pushing for hybrids and other alternative fuel vehicles and trying to be proactive about gas prices are not mutually exclusive things.<<
The government can't make consumers want hybrids and alternative fuel vehicles the way that market pressure can. They already passed a consumer tax incentive equivalent to the increased cost of a hybrid over a non-hybrid. There's not much more they can do.
The problem right now is that none of the manufacturers are shipping enough alternative fuel and hybrid vehicles to their dealers. Everyone has a waiting list of months. Plus US manufacturers have great designs of their own, ready to be produced, but have been dragging their feet. Higher gas prices will also help spur the biodiesel industry, which is a vital part of the picture.
As for hurting the economy, so far the already high gas prices AND hurricane Katrina haven't done it. Did you see what the stock market did today?
Dave