Never before has there been more talk (besides maybe in the 1970's) about alternative fuel development than this year. As much as they have tried, it wasn't environmentalists who spurred this development, it was rising gas prices due to shortages and uncertainties in the gasoline market.
Gas makers were able to supply, based on their estimates, X gallons of fuel. To keep a shortage from happening, they had to charge Y dollars, or else people would buy too much. Gasoline has an incredibly inelastic demand (short term at least), so they really needed to jack up those prices. Since they had approximately the same amount of expenses as before, they reaped a huge margin and record profits.
This is what had everyone in an uproar. Even Bill O'Reilly had an ideological conniption.
What was the effect on the decision making of individuals though? People started trading in their SUVs. The hybrid market is booming. They can't make Toyota Priuses fast enough. Those relatively short-sighted America giants, GM and Ford, are still struggling. And the now insanely expensive hydrogen alternative is starting to look somewhat reasonable given the long-term gas price picture.
So let those companies continue to push up the price of gas (which, they won't, since that would mean they would have a surplus of gas, higher storage costs, et cetera). In the long-term picture, such price gouging will lead to the more efficient and necessary use of gas across the entire spectrum of society.
Hopefully politicians will ultimately realize the long-term benefit also.
posted by Brett @ Friday, April 21, 2006
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