The price of gasoline is down - from over $4 a gallon to about $1.50 a gallon. That's because the price of oil is down from almost $150 a barrel to around $40 a barrel. This is good news for moms who chauffeur their kids to soccer games, music lessons, and religious school, and for truck drivers moving products from factories to stores. The savings should trickle down to consumers as well.
But, as the TV pitchmen say: These prices won't last!
They are the result of a global recession which has suppressed demand. When the economy recovers -- as we pray it will -- demand will increase, not just in the U.S. and Europe, but in India and China and elsewhere. Unless there is additional fuel supply to meet that growing demand, prices will push skyward again.
Another word for yo-yoing prices is volatility. Volatility is bad for businessmen who need to make long-range plans and families attempting to budget. It puts additional stress on an economy already sickly due to the myopia of Wall Street tycoons and the incompetence of the politicians paid to keep an eye on them.
You can decrease volatility by reducing demand -- by making people "change their lifestyles," a euphemism for making people poorer. A better way to decrease volatility is by increasing supply.
You can do that by drilling more, for example, in Alaska and in coastal waters. But face two facts: (1) most Democrats oppose drilling and Democrats decisively won the last election; and (2) exploiting finite and limited domestic oil resources does not get us closer to a long-range solution.
What would? Creating a competitive marketplace, one in which consumers could choose among a variety of transportation fuels. This would also reduce our dependence on oil -- most of which is controlled by regimes hostile to the United States and its allies (e.g. Iran, Saudi Arabia, Russia, Venezuela).
The quickest way to introduce competition in transportation fuels is for automobile manufacturers to make many more cars that can run not just on gasoline but also on alternative fuels.
In the long run, that probably means plug-in hybrid electric cars, since electricity can be made - cheaply and cleanly - from many different sources. But in the short and medium term, it means making the few, small technological changes required to would allow ordinary internal combustion engines to utilize alcohol fuels. The cost is less than $200 per vehicle - and that could translate into lower prices at the pump for years to come.
Today, while efforts are being made to save the teetering American automobile industry, would be a good time to make the transition to fuel choice. Now that a bailout has passed the House, the Senate should insist that any restructuring plan should include a requirement that all new cars sold in America be Flexible-Fuel Vehicles (FFVs). That prospect alone is likely to dampen speculative oil-price swings. It also will provide an insurance policy should oil suddenly become scarce again - because, say, terrorists blow up a major petroleum processing facility, something that's been attempted in the past.
An added bonus: Alcohol fuels have environmental benefits compared with gasoline. And wouldn't you rather be buying your fuel from hard-working farmers, rather than indolent sheiks, terrorist-sponsoring mullahs, and tin-pot tyrants?
As you probably know, in the U.S. today, alcohol fuel is mostly being made from corn. As you may not know, the price of corn has fallen almost as far and fast as that of oil in recent months. Those who claimed that using some corn to make ethanol was causing higher food prices were either misinformed (any number of journalists) or lying (those paid to protect oil's monopoly). The facts are that when corn prices rise, farmers - generally rational folk - plant more corn on previously fallow land, and put in the additional effort to produce more corn per acre. So the impact on food prices is negligible.
Further, growing corn is just one way to transform the sun's energy into liquid fuel. The Brazilians make ethanol from sugarcane and use that in their FFVs - many of which are manufactured by General Motors and Ford. Dozens of other tropical, third-world countries could produce sugar-based ethanol - if there were sufficient demand.
Another kind of alcohol fuel, methanol, can be made from crop waste or wood waste, municipal garbage, coal, natural gas and many other substances.
The good news is that politicians and businessmen actually can choose to do something to maintain lower, more stable fuel prices, keep more dollars at home, spur America's economy, bolster our national security, and improve the environment - all at once. The bad news is that doing the right thing has not been their habit in recent years.