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Want to lower gas prices? Advocate for energy independence!

July 31, 2008

It’s not a shock that reductions in supply or increases in demand will increase prices.  The strange thing about our current oil price is that supply is stable and demand increases are moderate (or at least predictable).  So what is driving the price up?

I don’t agree with this as a complete picture, but let’s blame “market speculation” just for the fun of it.  There is some justification for blaming speculation – when China removed price controls, oil fell because demand would drop.  Oil falls on news about major car makers converting from trucks to cars.  Fundamentally, the THREAT of reducing demand is enough make the price of oil drop.

If the US takes decisive action to reduce our demand for oil then the price would drop.  I believe that oil rich countries would then be forced to take equally decisive measures to maintain our addition on oil.  Unfortunately, with low prices we would again lose our conservation drive.  There is a strong historical pattern of this type of behavior.

Do we have the will power to finally break free of the Oil cycle?

Do we have the will power to finally break free of the Oil cycle?

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