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Why are gas prices so high? Is it really the war, or is it The Man screwing us? We never got much of our oil from Russia to begin with. Seems like price gouging to me, and I bet 2022 will be a record year for oil company profits. —Walking in Beaverton
Say what you will about American profligacy, we never let perfectly good blame go unweaponized. When we encounter a problem, we don’t waste time trying to figure out who’s genuinely responsible; we just think of somebody we already hate and start coming up with reasons why it must be their fault.
No shade to you, Walking; I’m as guilty of this as anybody (watch for my upcoming book, Sean Hannity Basically Gave Me Hemorrhoids), and God knows I have no love for Big Oil. In this case, however, we don’t need fat-cat villains to explain what is pretty clearly a basic supply-and-demand problem.
As noted in last week’s paper (“Gassed Up,” WW, March 9), oil is a global commodity. It doesn’t matter that we never relied on Russian oil; what matters is that everybody who was relying on Russian oil is now bidding against us for whatever’s still available.
Interestingly, this petrochemical Donner Pass scenario persists even though we now actually export more oil and gas than we import: Yes, you may have missed it amid all the riots, fires, plagues of locusts and general breakdown of society, but the U.S. actually achieved energy independence in 2021. Go us! It doesn’t do us any good in this situation, mind you, I just figured it would piss you off.
Still, look on the bright side: Remember how the world is ending because of climate change?* And one of the big reasons is a market failure where the negative externalities associated with fossil fuels aren’t reflected in the price we all pay?
Well, now they are, if only by accident. It’s like that carbon tax—the one we all voted for because we knew it’d never happen—actually happened. Say you assign a social cost of $100 a ton to carbon (in the ballpark, if a bit low). That raises the at-the-pump price by about 90 cents a gallon. Sound familiar? I wouldn’t stand up and shout it at the local Arco station on Free Turnip Day, but…this is probably what we should have been paying all along.
*Probably not the best sentence to begin a “look on the bright side” argument, but oh well.
Questions? Send them to dr.know@wweek.com!