Lower Gas Prices and the Presidential Election

The precipitous fall in gas prices the third quarter of 2008 is giving drivers a break from $100.00 fillups but is being viewed with guarded optimism as only a fleeting deferment. Gas prices fell approximately 30% since summer and may drop to $2.00 per gallon, some analysts cautiously predict .

The actions that commuters took to save money and conserve fuel this summer by carpooling, using public transit, and buying more fuel efficient cars are predicted to continue despite the drop in gas prices. Once people change their habits of daily living, they do not easily revert back to old patterns. Demand for gasoline has dropped by over four percent in just the last month; jet fuel demand has dropped by over 9 percent.

OPEC Balancing Act
This drop in demand has OPEC members considering cutting back production to cause prices to rise, but they are aware that too much of a cutback will worsen the economic crisis, a big mistake for them in the long run. OPEC oil prices at $147.27 on July 11 have now dropped by more than fifty percent to $66 per barrel.

• Carpool, use public transit, bicycle, walk
• Drive at or just under the speed limit. Remove unnecessary weight from your vehicle. Cut down on wind resistance by removing the ski rack or other roof equipment.
• Coast up to a stop sign. Accelerate slowly from a stop. Give the car ahead plenty of room in slow traffic to minimize the use of braking.
• Telecommute or ask to switch to flex-time to avoid commuter traffic.
• Own and drive an alternative fuel vehicle.

Was the Price of Gas Artificially High to Begin With?
Some economists feel that this explanation is a bit too neat and clean; it cannot all boil down to supply and demand; drivers cutting back may not be the entire reason. Recently a consultant on petroleum issues testified before a Senate subcommittee on gasoline pricing during which he could not explain the high prices seen this summer by applying market fundamentals, and could not rule out the possibility that decisions are now being made for political reasons to adjust gas prices down to the market normal to coincide with the election.

Drivers are Adapting
Regardless of the causes of the sudden drop in gas prices, or the peak prices we experienced this summer, drivers are continuing to make adjustments to their commute habits by using public transit, carpooling, buying more fuel efficient vehicles, and hypermiling, the savings from which will probably not be immediately fed back into the economy, but will be sequestered away in preparation for tough times.

Regardless of the price of gas, there are important reasons to drive less and conserve fuel.

• With billions of fewer miles driven than last year, motorists noted a decrease in auto accidents and fatalities this year.
• Every gallon less of gas burned emits 20 pounds less carbon dioxide into the atmosphere.
• Less reliance on Middle East oil.
• Slower depletion of non-replenishable natural resources.

Greenspan Says 'Oops"
Former Federal Reserve Chairman Alan Greenspan recently conceded that he was fundamentally wrong for believing that deregulated banks would act responsibly in their lending practices for the sake of their shareholders. As we brace for the "once in a century economic crisis", we are reassured that we can have some effect on the economy by acting on our belief that conserving fuel and other natural resources, and curbing wasteful habits can bring about positive change.