In this week’s address, President Obama spoke about energy challenges. Recognizing that “there’s no silver bullet that will bring down gas prices or reduce our dependence on foreign oil overnight”, President Obama still stopped short of telling politically inconvenient truth that artificially low gas prices are unsustainable and that they hurt U.S. economy in the long run. U.S. Secretary of Energy Steven Chu had been more outspoken than his boss. “Somehow,” Chu said, “we have to figure out how to boost the price of gasoline to the levels in Europe.”
Europeans pay at least twice more than americans for gallon of gasoline. Never mind the current European debt crisis, the higher gasoline prices did not kill European economy. The downturns of higher gas prices are obvious, but why would the higher gas prices be beneficial for U.S. Economy in the long run?
- Artificially low gasoline prices hold back progress of biofuel industry. If given a chance, the fledgling biofuel market will jump-start, creating new business opportunities, new U.S. jobs and laying foundation for energy independence.
- Currently $4 billion of tax dollars subsidize the U.S. oil industry every year. With higher gas prices in place there is no justification for tax breaks and subsidies to oil companies.
- Higher gas price is the best incentive to replace gas-guzzling vehicles by fuel-efficient models, with increased global competitiveness of the U.S. automotive industry as a side effect.
It’s not all roses going the way of higher gas prices but the current status quo is unsustainable in the long run.