Co-authored by Randy Essex, RMI Editorial Director

It’s a fallacy that we can drill our way to low gas prices, and trying to do so not only threatens our health, but also wastes our money and misdirects innovation. If we stop focusing on the problem of high gas prices and who’s to blame and start pursuing solutions to the true problem—our oil dependence—we might find we agree more than we think.

Oil price volatility carries a huge economic cost. High oil prices have preceded every recession since 1973, and have put mobility industries especially at risk.

Savvy companies get this. FedEx (which burns 1.5 billion gallons of petroleum-based fuels) is now betting on electric or hybrid vehicles, and adding biofuels and natural gas to the mix for its delivery van, truck, and jet fleets.

(Related: Energy Savings Help Deliver on Free Shipping Day)

The relentless pursuit of low gas prices forces us to spend trillions and risk young Americans’ lives. The Pentagon gets this, and has made “more fight, less fuel” a central part of its sweeping strategy to not only reduce through efficiency the amount of oil the military uses, but also to replace it with alternative sources.

The North American Council for Freight Efficiency’s fleet efficiency survey shows that once the leaders in trucking started adopting efficiency measures, they continued doing so even when diesel prices dropped. Now that fuel prices are rising again, that investment is rewarding them even more.

(Related: Smarter Trucking Saves Fuel Over the Long Haul)

Many have pointed to the Obama Administration and its energy strategy, in spite of the fact that gas prices and volatility are tied to the world market (which pays little regard to who is president).

Energy Secretary Steven Chu is in hot water for having said in 2008—before he was energy secretary—that, “somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” Politically inconvenient given Chu’s position now, but did he have a point?

Higher prices create incentives to move toward efficiency and away from oil. People respond to incentives, whether they are created by government or by the market.

If gas prices rose and stabilized, people would have greater incentive to buy fuel-efficient vehicles—a phenomenon we’re seeing today. Automakers are seeing sales of fuel-efficient vehicles rise and GM just announced that the Volt sold a record 2,289 units in March, a 50 percent increase over the previous record.

[RMI’s recent publication] Reinventing Fire shows how new business models and competitive strategies can shield our economy from the volatility of oil price shocks. Across buildings, transportation, industry, and electricity, Reinventing Fire show promising ways to win the clean energy race, not forced by public policy but led by business for durable advantage.

The political blame game is a waste of time and energy. The fact that the U.S. economy has been whipsawed by volatile oil prices for decades under administrations both Republican and Democrat makes this clear. It’s time to move on.

This post originally appeared at the RMI Outlet blog and was republished with permission.

Comments

  1. Hena
    AKeJnymCsaElvbnz
    July 30, 2012, 11:47 am

    Honestly?????? We at least have the government colortnling these prices, why we have to put up with this when those in government officer are not affected by this. I am really angry now more than ever as it is now going into 2 mths I am unemployed and I cannot believe how difficult it is to get a job. We have the sunshine list out yesterday, gas prices up by almost .05cents, grocery and the new election which will cost us more for these idiots to sling mud at each other not acheiving anything at all. Can you tell I am angry???

  2. Searcher5
    April 15, 2012, 10:41 pm

    The writer said it herself, it depends on the world market, and the powers that be currently won’t let us get out of the world market, which we can do. NO matter what these pundits say, it’s still a supply and demand problem. We demand more than we produce, so prices go up, by design currently.

  3. David L
    Texas
    April 15, 2012, 1:15 pm

    From Obama’s reelection campaign to her mouth … This is not an incremental change as the author ignores. Price has DOUBLED since Obama became president. His policies have served to make gas more expensive and discourage development, refining, and production of fuel since his election.

    No pipeline. Shutting down the gulf of Mexico, using the EPA to stand in the way of lowering costs to transport fuel … No wonder the author wants to make people think that saving money on fuel is bad. It exposes Obama’s failed energy policy.

  4. will
    Ohio
    April 14, 2012, 11:02 pm

    I agree with the “all” of the above strategy , however many people who espouse energy independence really don’t believe in their own strategy. aka Obama
    Investors call it “diversification”

    Look up “stripper” wells on the Internet to get a real scoop on what is going on with domestic oil production. We were abandoning holes before they were dry.

  5. Harry C. Risher
    Indiana
    April 14, 2012, 2:07 pm

    Obviously, you don’t worry like the average American about the daily financial burden of working harder and longer not only to drive to work,but heat and cool our families at home! Reasonable priced fuel is readily available in North America—if dreamers like you get in the real world. Sure alternative sources of energy are out there,but the rapidly growing populations can’t put their lives on hold paying ridiculously high prices while waiting for your Silver Bullet !! Build the Canada Pipeline NOW and DRILL our available oil fields to take the burden off ALL AMERICANS—even the ignorant,aloof,and arrogant Socialists like Hussein Soetoro,Dunham, Obama ,and out of touch dreamers like you!!

  6. Scott Cameron
    United States
    April 13, 2012, 9:25 pm

    There are MILLIONS of us out here who CANNOT afford a new car. High fuel prices disenfranchise a HUGE segment of the population and create animosity and anger toward the Wealthy Big business attitudes.

  7. I. P. Freely
    over here
    April 13, 2012, 6:15 pm

    Volt= $40k after rebates. $8k batteries last 8 years. This is a waste of money. I’ll keep driving my old 8 cyl. and keep it’s components running rather than in the dump. Oh ya, how many nuke plants will you have to build for all those Volts? Only the rich can afford your non-functional “solution.”