While gas prices might seem to be falling, we must remember why? Has domestic production reached 2019 highs? Has geopolitical conflict subsided, offering a respite from the complications on foreign production? Has domestic demand fallen?
The answer to all three of these questions is a resounding no. All that has changed is taxation on the product at the federal, state and local levels, who have all in some way temporarily lowered the excise on gasoline.
However, as beloved as their plans have been, economists warn against this type of action
in the long run. By lowering the tax on gasoline during a time of heightened price and
slowed production, the demand is increased.
As tragic as it may sound, high prices are the markets way of dissuading the usage of a given
product. Local and state officials cannot be blamed for attempting to lower the burden at the pump for New Yorkers, after all there is little else they can do to ease the burden otherwise.
However, federal officials should know better than to increase demand nationally even more so than it already is. Without serious attempts to encourage an increased supply or provide alternatives, policies that increase demand are simply malarkey.
The trifecta of gas tax holidays we are experiencing in Suffolk County right now are bandages on a wound, one still hemorrhaging as Americans see their purchasing power diminish. The pain is most felt by the most vulnerable members of society, such as those on fixed incomes.
There has been much scapegoating on the part of President Biden over why gas prices are rising. So much so that even Jeff Bezos, hardly a conservative standard bearer, had to set the record straight. Domestic policies, as well intentioned as they may be, changed under the Biden Administration to disincentivize domestic production, so much so that producers aren’t even willing to take a chance expanding production under these favorable for their bottom-line circumstances.
Domestic production currently stands at approximately 8.5% percent lower than the pre-pandemic peak. Regardless of Biden’s broader economic goals for decarbonizing the economy, surely, he must at least be concerned over the political ramifications come this November. With the petroleum reserves in the United States, it is more than possible to be a net energy exporter, as history has shown. The only hindrance to a successful Biden energy policy seems to come from a Biden Administration more concerned with the potential for being labeled
a flip-flopper than with the price at the pump.
The disconnect between Washington and Main Street should come as no surprise. Upon hearing the news that gas prices were rising, Stephen Colbert quipped that he didn’t care on
account of him owning a Tesla – to applause.
Then, many of Biden’s advisors come from ivory tower educations and silver spoon upbringings, in true fashion of the party claiming to represent working class interests. For these advisors, the problem of rising prices, especially gas prices, is purely academic. It can be minimized with esoteric language and to some it may just be the prompt they were waiting for to move us to a green economy.
Their life experience draws from a narrow well, and it shows.
Therefore, the United States ought to pursue an all of the above energy policy to tackle this latest crisis and return prices to manageable levels.
