It wasn't so long ago that the airwaves and blogosphere echoed with the shrill cry of "Drill here! Drill now! Pay less!" It seemed people were so desperate for the price of gasoline to stop its meteoric rise that they were willing to open up every square inch of the country and coastline to oil exploration and eventual extraction, environmental concerns be damned. The former and current governors of Florida softened their position on the issue and became amenable to the idea of oil rigs close to the state's beaches. President Bush has lifted the executive drilling ban on the outer continental shelf and has called on Congress to lift theirs. McCain is making appearances on oil rigs and although Obama has stated we could save conserve as much oil by maintaining proper tire air pressure as we could get by drilling, he has conceded that off-shore drilling is not completely out of bounds. Thankfully, a sudden $30 drop in the price of a barrel of crude and cheaper gas has turned downed the volume of that shallow slogan and exposed its threadbare logic. Perhaps we can even use this temporary respite to come up with a more intelligent, sustainable plan for meeting future energy needs. What exactly? Hit the jump for my answer.
[Source: MSNBC / The Huffington Post / Cattle Network / China Car Times]
First, we need to look at what happened. Obviously, no new drilling has occurred in the past few weeks to increase the supply, so why are we paying less? How can we continue to pay less or at least not have to re-finance the house (good luck with that) to fill up the gas tank? There are several factors at play but perhaps the easiest one to recognize is the fall in demand. Americans have responded to fuel price hikes by driving less and buying smaller, more fuel efficient vehicles. June saw 12.2 billion fewer miles driven (4.7 percent) according to the Department of Transport and there was, in the first quarter of 2008, an average decline in consumption of 900,000 barrels a day. Also, the economy in general has also been continuously soft this year and analysts think this may also help depress near-term future demand and keep the price close to where it is now, if not slightly lower. It's not just America either. The Chinese oil company Sinopec has announced it will temporarily stop importing oil as its current supplies are sufficient and a post-Olympic price hike to international market levels may hold increases in Chinese consumption somewhat in check. Other booming nations such as India and Brazil are also starting to show a lessening of demand.
The other main factor involved with paying less for gas is the rise of the dollar. After many months of steady declines the dollar has pulled a Lazerus and is now showing signs of life. This means a dollar can now buy more oil. The greenback's rise has also taken the wind out of some of the commodities speculation bubble which had contributed slightly to $147 oil. However, unless you control a fund with billions in assets, there's not much you can do to affect currency strength which is why reducing demand remains the place where people should continue to focus their efforts if they would like to keep paying less.
So, what's the plan? Well, we could drill for more in the deep waters of the outer continental shelf, though it would take years to retrieve and still be expensive. We could dig up all the oilshale in the country and squeeze the black stuff out of it, but that would also involve an extended time frame and great financial and environmental expense. So, perhaps we should continue doing what we're doing. Drive smarter, drive smaller, pay less. This seems to help keep prices moderated, slows down the destruction of the only planet we have and encourages innovation by companies keen to develop new technologies that consumers can get excited about supporting. Consider the gains that have been made in green technology in the past 18 months in the fields of transportation and renewable energy production. A plethora of hybrids and electric cars are leaving drawing boards and heading for driveways. Huge numbers of wind and solar projects are being planned and built and technological advances in these and other renewables are announced almost daily. Bio-fuels, though controversial, are being studied and improved and steadily finding their niche in the market. If a company like Mercedes-Benz, with its heritage and tradition stretching back as far as the advent of the automobile, can declare a goal of becoming petroleum free by 2015, then certainly it behooves us to consider how bright our future can be if we do the same. We might even "pay less."