America Needs 4 to 7 Dollar-a-Gallon Gasoline

America Needs 4 to 7 Dollar-a-Gallon Gasoline

© David Burton 2007

gas pump

We Americans have a short memory, a short attention span and an unhealthy focus on the here and now. We focus on the here and now and we demand instant gratification. For proof, consider the stock market. Share prices rise and fall with each quarterly report. Never mind the long-term outlook of a company. Miss a quarterly forecast or a dividend payment and the investors, along with Wall Street, head south, taking the price of the stock with them.

So it is with America’s attitude toward world affairs. A war must be fought and won in a year or less. Otherwise, we lose interest. We call for the troops to come home, and we clamor for new leadership. It matters not that the war may not be completed. It matters not if we are winning or losing. We Americans have no stomach for anything more protracted than the annual solar cycle, and even that is something that many of us consider the “long term”.

Last year, when the price of oil soared past $70 a barrel and gasoline was selling at $3.00 or more a gallon, the American consumer screamed for congressional investigations of petroleum companies, SUV sales plummeted and hybrid vehicles became the rage. Suddenly, Nuclear power was no longer a dirty word, and a dozen technologies for potentially supplementing or replacing petroleum came into vogue. Some of our political demagogues called for opening up the strategic oil reserves and reducing the gasoline tax to relieve the financial strains caused by the rise in fuel prices.

At that time when energy costs were peaking in November of 2005, I wrote an article on ways to solve “America’s energy dilemma” (Ref. 1). In the article, I pointed out that “Most experts agree that the surest way to reduce demand is to raise gas taxes, as Europe has done, but they also agree that Americans wouldn’t stand for it.” (Ref. 2). Well, America, we will have to stand for it or we will have to face the likelihood of continuing future shortages of energy, of rising energy prices, and of the prospect of being held hostage to hostile and despotic countries such as Iran and Venezuela. Let’s remember, a significant portion of the world’s oil reserves lies in the Middle East, a region that Islamic radicals are trying desperately to take over and control.

As was stated in Ref. 1, “If America is to meet its energy needs, at least in the near future, then the U.S. must get serious about energy conservation. One way to encourage, if not force, energy conservation, is to increase the cost of energy, gasoline in particular. Americans, as in most of the world, would then take the necessary steps themselves to reduce gasoline consumption. We would drive less, and buy more energy efficient vehicles. We would demand that such things as computer synchronized traffic signals be extensively introduced.”

In addition to encouraging and enforcing energy conservation, increasing the price of gasoline makes it financially feasible for companies, large and small, to invest in the discovery of domestic sources of petroleum and, more importantly, in the development of alternate sources of energy.

In 1983, Malcolm S. Forbes wrote (Ref. 2), “One way to maximize one good from oil’s present price plunge is to slap on - right away - a per-barrel import fee of no less than 10 bucks a barrel. Not just $5 to equal the immediate price decline, but at least a $10 fee on imported barrels. Not only would that cover some probable near-future price erosions, but, of far greater significance, it would preserve the incentive to keep drilling for new domestic oil sources. And maybe make us more hesitant to abandon all of the many well-along undertakings to develop alternative energy sources.” Forbes’ comments in 1983 are even more relevant today.

Another observation made by Pete Domenici is (Ref. 3), “Instead of begging OPEC to drop its oil prices, let’s use American leadership and ingenuity to solve our own energy problems.” So, where is that leadership, as least the political kind of leadership?

Government action is needed now. To date, we have seen congressional inaction in supporting offshore wind farms and exploratory drilling in the Arctic National Wildlife Refuge and on the continental shelf. “Experts estimate that in the Outer Continental Shelf, where oil exploration is mostly banned, there are more than 85 billion barrels in reserve.” (Ref. 4) In addition, the government must speedily act to maintain high fuel prices. “A lot of money is being invested in alternative energy sources, and many of these endeavors will come a cropper if the assumption of ever-higher oil prices proves false. Then there will be ever-louder cries for expensive government subsidies to help out.” (Ref. 4)

Since writing the article on solving America’s energy dilemma, crude oil prices fell to below $60 a barrel and gasoline prices dropped to near $2.00 a gallon. Within weeks of the price of gasoline falling below $2.50 a gallon, “consumer interest in gas-guzzling SUV’s is making a comeback. And interest in hybrids and other fuel-efficient vehicles appears to be dropping. . . . The recent drop in gasoline prices shows once again that consumers have a short memory when it comes to the effect gas prices have on their shopping behavior.” (Ref. 5)

America must bite the bullet and instead of thanking the Arabs and nature for a likely temporary drop in oil and gasoline prices, we must instead keep our eye on the long range (10, 20 or 50 years into the future) objectives and realities. We need stably high oil and fuel prices for not just a year or two, but indefinitely. We need to make sure that energy conservation is a long-term way of life. We need to make it highly attractive to find new sources of oil and gas and to bring to market alternative sources of energy and their associated infrastructures. To accomplish these objectives, we need to ensure that gasoline prices remain at or above the $4 to $7 a gallon level and that the cost to the American consumer of imported oil remains well above $70 a barrel. If we are to solve America’s energy dilemma, the American public must demand that their politicians stop pandering to short term solutions that provide immediate gratification to their constituencies, but which, in the long run, place this country in much more serious trouble. Unfortunately, the legislative branch of our government has, to date, exhibited little intestinal fortitude in looking beyond the next congressional election. Failure to implement meaningful long term solutions for Social Security and our energy dilemma are prime examples of this reckless behavior.

Representative Ed Markey of Massachusetts has stated that "A $6 gallon of gas - offset by a deep cut in income taxes - would go a long way to stimulating conservation and new technologies." ( Ref. 6) Can we expect Congress to follow up? I'm not holding my breath.


  1. Solving America’s Energy Dilemma, David Burton,, 2005.
  2. Thoughts - on the Business of Life, Malcolm S. Forbes, Forbes, October 16, 2006, Pg. 140.
  3. Thoughts - on the Business of Life, Pete Domenici, Forbes October 16, 2006, Pg. 140.
  4. Powerful Antiterror Weapon - Unused, Steve Forbes, Forbes, October 26, 2006, Pg 23.
  5. Cheaper gas prices fuel SUV comeback, Jay Fitzgerald, Boston Herald, October 10, 2006, Pg. 24.
  6. The world in his hands, Brett Arends, Boston Herald, May 2, 2007, Pg. 23.


  2 May 2007 {Article 17; Govt_04}    
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