Thursday, May 17, 2007

Don't "Do" Anything About High Gasoline Prices

With gas prices creeping up again, politicians of all stripes--especially Democrats--are proposing to "do" something about it.

Last time gas prices spiked, after Katrina, it was the Republicans making silly proposals, including one to send $100 to every American family, like some kind of holiday bonus from Congress.

Now Speaker Pelosi and other Democratic leaders are the one demogaguing gas prices, raising their typical bogeyman, the big bad oil companies.

While it's true that oil companies benefit from the high prices, we don't see any evidence that they've engineered it this way. The real culprits are tight refinery capacity, increased global oil demand and, despite higher gas prices, increased U.S. demand for gasoline. If Democrats are serious about the price issue, they'll figure out a way to get some new refineries built.

In the meantime, higher gasoline prices are a good thing. Americans still guzzle gas like there's no tomorrow, and if we keep doing so, there really won't be a tomorrow. At some point, higher prices will stifle demand, and, at a minimum cause more and more Americans to switch to vehicles with greater fuel efficiency.

Sustained higher prices will also light a fire under Detroit's automakers to get going on better models. For years, GM and Ford, in particular, have complained about proposals to raise fuel economy standards while they built an unsustainable business model around selling gi-normous SUV's and pick-up trucks. Now, they'll have to scramble regardless of what our ineffectual Congress does.

Higher prices will also encourage entrepeneurs, who have some great ideas about alternative ways to make cars run, and help them attract capital. (We read recently about one inventor who's come up with an ingenious way to use steam to boost the output of the standard four-stroke auto engine by nearly 40 percent.)

Ultimately, the challenge for congressional Democrats is not to bring gas prices down--not that they can anyway. Rather, it is to craft a truly comprehensive energy/environmental bill that will get us on the right path. We're waiting.

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