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March 2, 2013

Choking on high gas prices

The Daily Star

---- — “I think all of us should cut down to the bare minimum of gas use and let them choke on it. ... Just separate the needs from the wants in using our cars.” 

So wrote area resident Alecia Ernst when asked recently about high gas prices. 

Sad thing is, a lot of people are already down to “the bare minimum of gas use,” just to get their groceries and get to work. And it’s those people who are hurting the most as the numbers at the pump continue to creep upward. 

On Wednesday, The Wall Street Journal reported that gas prices are nearing the so-called “danger zone” for investors. 

Jeffrey Kleintop, chief market strategist at LPL Financial, wrote earlier this week that “High energy prices can make the economy and markets more vulnerable to a negative event that drives stocks lower.”

Great. As if our economy and markets need any help in that regard. 

Try to figure out why prices are so high, and you start reading about “waterborne light sweet crude” and something called a “crack spread.” But The Atlantic recently offered a simplified explanation: Supply is down and demand is up. It’s Economics 101. 

So it would seem as if Alecia Ernst is on the right track. If we could all somehow cut back on our gasoline use, maybe it would help drive prices back down to a manageable level — or at least keep them from getting even higher. 

Thing is, it’s not our demand that’s causing the problem. Even if we all stop driving today, overseas demand in emerging markets such as China would continue to go up. 

So what do we do about it? Some of us could, theoretically, follow Ernst’s advice and cut back on our driving. But that’s not always as easy as it sounds. 

Rural life simply does not offer many options when it comes to getting to work or school — not to mention all life’s other obligations, such as the doctor, the laundromat, the dump, the grocery store or the DMV. Those five stops, in fact, might be in five different towns, depending on where you live. 

These harsh realities make it all the more difficult to swallow the oversized profits recorded by refining companies such as Valero Energy ($1.01 billion for the fourth quarter of 2012) and Marathon Petroleum ($755 million for the same period). 

We appreciate Gov. Andrew Cuomo’s recent efforts to make it easier for customers to report possible price gouging at gas stations, but we suspect these high prices originate a lot higher up the food chain. 

And rich or poor, big city or small town, these high prices hurt us all.