CNN reported today that some pundits are now forecasting $4 per gallon of gas before the end of the summer. My response to that: bring it on! Now before you start sending me angry comments, here's why I made what some may consider an obscene statement:
1. It's No Big Deal - on my way to work this morning I filled up at my local station and paid $3.54 per gallon. So the fearsome $4 per gallon price is only 12% more expensive than I am currently paying.
2. The Financial Impact is Minor - My fancy Geo Prism 1997 gets 30 miles to the gallon, and I drive about 1,000 miles per month. That means that at $4 per gallon I will be spending $15 more on gas per month. My wife's increase would total about $25 per month given that she drives a mini-van and her commute is slightly longer. This puts our total increase at $40 per month, not trivial, but hardly cause for a major uproar.
3. It's Better for the Environment - like any other commodity, an increase in the price of oil will encourage people to conserve and buy less of it (or at least cause demand for oil to grow at a slower pace). This means less smog forming emissions, and less CO2 in the atmosphere.
The higher the price of gasoline, the more cost-effective alternative fuels become, and the higher their adoption rate. In addition, a high and increasing price of gasoline provides an incentive for the market to innovate and bring to market new technologies that otherwise there would have been little financial incentive to develop.
4. Energy Independence - no, I don't believe in the fiction of energy independence. I think that it is mostly a ruse by oil companies and Washington insiders to justify drilling for oil in some of nature's most pristine environments (such as Alaska's ANWR). Nevertheless, in the long run, with the advent of new technologies that will replace the "black gold", America's reliance on unstable and often distasteful regimes that produce much of the oil we consume, will decline. The only proper response to that statement is: "AMEN".
Bring on those higher oil prices, we will pay them and even thrive. In the long run, high gasoline prices accelerate the day when oil will no longer be an important commodity. With that in mind, even at $4 per gallon gasoline would be too cheap in this country.