The Upside of Rising Fuel Prices

To paraphrase an old quote about the weather, everyone complains about gasoline prices, but no one does anything about it. Which is exactly how it ought to be. As painful as filling up might be today, it is nothing compared to the pain we’ll feel when the pump runs dry.

Granted, that won’t happen for decades or longer, but rising demand in the developing world will certainly put further pressure on worldwide oil supplies. As any Economics 101 student can tell you, when demand rises faster than supply, higher prices always follow. Since we are dealing with a finite resource, today’s higher prices are like the proverbial canary in a coal mine. Eventually demand will outstrip supply and when there’s no longer enough oil to go around – unless we’ve come up with alternative energy sources – the price countries are willing to pay to fuel their economies will likely be measured not in dollars, but blood.

But therein lies the solution because there is no shortage of energy, only petroleum. Wind, solar, geothermal, hydroelectric and nuclear, as well as biofuels, can provide all the energy we’ll ever need. The problem is that these are neither user-friendly nor cost-efficient on the scale needed to replace oil. Getting them up to speed will require vast investments in time, technology and infrastructure – investments no one will make if they have to compete against lower cost petroleum.

Which is why we should not tamper with escalating prices at the pump. They are the single best way to spur the investment that will bring new, more environmentally-friendly energy sources to market, while encouraging the conservation that will bridge the gap until they arrive. By paying the price today, we can start developing those alternatives now and avoid a steeper and far more traumatic price tomorrow.