Gas Prices: Five Ways Feds Could Lower Them
President Barack Obama said on Saturday that there are no easy answers for decreasing the price of gas which is about $3.89, according to AAA’s Tracker.
This is 4 cents per gallon more than a week ago and $1 more than a year ago.
While no option is easy, there are some feasible ways to decrease the price of gas.
1. Invest in new forms of energy
Oil is running out. While an oil shortage is not the reason for the current increase in gas prices, within 40 years, oil will no longer be affordable.
Developing other sources of energy, in addition to potential environmental benefits, would allow the U.S. to develop a larger percentage of its own energy.
Natural gas will be affordable for roughly 75 more years, according to the Baltimore Sun. Coal will be a viable option for even longer. Nuclear energy is also being developed, but with the risks associated with it, might not be the best option. Solar, wind and other energy sources are being researched as well and Obama pushing their development could help the U.S. become more self-reliant on energy.
Since other forms of energy would be used for many of our daily needs, oil would be used less. Since it would be less in demand, its price would decrease.
2. Create a national energy policy
President Carter was the last president to call for a national energy policy which was largely ignored, according to the Baltimore Sun. The creation of a national energy policy could be revisited, though, when developing new forms of energy for the nation.
A national policy would regulate prices of energy and gas, making it more affordable for Americans.
3. End subsidies for oil and gas firms
Twenty-eight House Democrats are urging the end of $8 billion in oil subsidies annually. Obama is pushing for the elimination of $4 billion in tax breaks a year.
These subsidies and tax breaks prevent these companies from paying the same amount in taxes as other companies. Ending these subsidies and breaks would generate a lot more money in tax revenue.
Oil companies have demonstrated substantial profits during the recession. Exxon Mobile Corp. reported a $10.7 billion profit for the first three months of the year. This is a 69 percent increase from 2010, according to The Hill. These companies are making a large profit and do not need aid from taxpayers.
House Speaker John Boehner (R-Ohio) rejected calls to consider legislation eliminating billions of dollars worth of tax breaks for oil firms.
If the subsidies were ended, the government would make more in revenue which it could use to fund projects investigating other possible energy sources. Ending oil subsidies would also put pressure on oil companies to reform.
Republicans argue that ending these tax breaks would increase retail gasoline prices. Obama, however, has called for an end.
"That’s $4 billion of your money going to these companies when they’re making record profits and you’re paying near-record prices at the pump. It has to stop," Obama told The Hill. "Instead of subsidizing yesterday’s energy sources, we need to invest in tomorrow’s."
Ending oil subsidies for oil companies would allow other forms of energy to be invested in and even out the competitive plain field amongst different types of energy. In doing so, oil companies will face more pressure to become more consumer-friendly.
4. Give the Justice Department task force power and strict punishments to impose
The Justice Department task force launched Thursday. Its aim is to discover fraud and manipulation in the oil market. This fraud would include illegal trading that impacts prices.
Simply investigating, however, is not enough. In order for the task force to cause change, it needs to be given power to punish those defrauding the American people.
A list detailing different types of fraud and the punishment for each one should be created to deter fraud in the oil market. A set list of punishments for different amounts of fraud would prevent any negotiation about punishments and make oil companies well aware of what they risk by committing fraud.
This would decrease gas prices because illegal trading often drives up gas prices.
5. Increase domestic oil production and drilling
Though not always a popular idea with environmentalists, an increase in domestic oil production would lower the gas price and give the U.S. government more direct control over what it pays for gas.
Drilling for oil will create more jobs in the U.S. and also make Americans less dependent on foreign sources for energy.
When President Bush lifted drilling restrictions, gas prices dropped. Some speculate that Obama lifting drilling restrictions would have the same effect now.
The San Francisco Examiner reports that the Energy Information Administration said that the Gulf of Mexico should have produced 1.84 million barrels of oil a day in the fourth quarter of 2010. Instead, it produced on 1.59 million barrels. For a loss of 250,000 a day. Obama’s drilling moratorium has decreased oil production in the Gulf by 10 percent.
This oil would not be imported and therefore cheaper.
These steps would effectively decrease the price of gas, even though they may not all be popular ideas.
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