17 months ago I posted a blog about $4.00 gas and the economy. It is my belief that it was the $4.00 a gallon gas price that finally broke the back of the economy which ended up in the worse recession since the Great Depression. I wrote about the reluctance of the Democrats to increase domestic production of oil, coal, and nuclear power and how this short sightedness would eventually lead us back to $4.00 a gallon gas. Now we are in the off season for gas usage and gas prices are around $3.00 a gallon. There are a lot of factors that go into the price of gas. The two biggest is the state of the world economy and the value of the U.S. dollar.

If the value of the dollar drops, the price goes up. If the world economy goes up then the price goes up. Recently we have experienced both a drop in the dollar and an increase in the world economy which will cause the demand for fuel worldwide to increase. The governments plan to buy up more treasury notes (print more money) is going to put more pressure on the dollar to drive it's value down. A lower dollar is good for our exports but bad for the overall economy. I believe that unless we can stabilize the price of gas to a lower price, our economy is going to porpoise. That is it is going to jump up and dive down like a porpoise hopping in the waves.

So how do we achieve that low stable price? Again there are several factors. Reduce demand and you will reduce the price. Reducing demand means driving less, using more public transportation, or driving more fuel efficient cars. We can only reduce our driving so much because our towns and cities grew up around the automobile and they are not very friendly to other forms of transportation. The push for more fuel efficient cars slacked off after the gas prices dropped but there is hope. The release of the incredible Chevy Volt will help to reduce our gas consumption by an incredible amount. But it will take several years before the car and others like it will make a dent in our fuel consumption.

Increasing output will also bring down the price. All around the world countries are scrambling to cash in on the increasing demand for oil by exploring all over their countries, especially in the oceans if they are lucky enough to have control of parts of the ocean. Every country except one that is. Instead of using our vast expanses of oceans, President Obama has imposed a moratorium to halt any new oil drilling in the ocean. At a time when we really need to be reducing our trade imbalance and create more jobs, Obama issues an executive order that prevents both of those things from occurring. That leaves us with the hope of developing an economical, environmentally friendly way to harvest shale oil. A resource that the U.S. has in abundance.

Other technologies such as gaseous coal, ethanol, fuel cells, and nuclear power can help us to achieve the cheap stable energy prices that we need for a strong economy. We need to diversify our sources of energy so we are not dependent on one particular source. But what we need the most is for our politicians to have the will to do what is necessary, and to keep us focused over the next 5, 10,, 15, or 20 years until that goal is reached.

Technorati Tags: gas prices climb, oil independence, offshore oil drilling