Politics & Policy

What to Do About The Gas “Crisis”

Maybe nothing.

EDITOR’S NOTE: This piece appears in the May 9, 2005, issue of National Review.

Despite what you may have heard, oil and gasoline prices have yet to reach record levels–once we adjust for inflation. Even so, the gasoline price spike that began in the fall of 2002 is the second most dramatic in American economic history–steeper than those in 1973, 1990, and 2000, and nearly as great as that experienced between 1979 and 1981. A back-of-the-envelope calculation finds that the average household today spends between $63 and $79 a month more for gasoline than it did just three years ago.

#AD#Perhaps the absence of an identifiable villain has dampened political outrage. Oil companies are making record profits, but there’s no evidence that they’re holding anything back from the market. Likewise, neither terrorists nor Iraqi insurgents have had any significant impact on OPEC production. Global oil production was 66.8 million barrels a day in 2002, 69.2 million in 2003, 72.5 million in 2004, and is at record levels in 2005.

Regardless, gasoline prices aren’t particularly consequential in the grand scheme of things. Sure, we’re approaching the record prices paid for gasoline in 1981–about $2.42 a gallon in today’s dollars–but on average we’re a bit more than half again as wealthy today as we were then. If we consider gasoline prices in relation to per capita disposable income, they are only 58 percent of what they were in 1981, 44 percent of what they were in 1955, and about 90 percent of what they were in 1972. That probably explains why gas-guzzlers are still selling as well as ever and politicians are hearing little outrage from constituents.

What’s driving the oil market is demand–not primarily from American SUVs, mind you, but from the awakening economic giant that is China. U.S. consumption grew by about 700,000 barrels a day between 2002 and 2004, but Chinese consumption grew more than twice as fast: by 1.47 million barrels a day. But, even accounting for China, global oil consumption has increased by only 5.3 percent since 2002. How could that have resulted in a near doubling of world oil prices?…

YOU CAN READ THE REST OF THIS ARTICLE IN THE CURRENT ISSUE OF THE DIGITAL VERSION OF NATIONAL REVIEW. IF YOU DO NOT HAVE A SUBSCRIPTION TO NR DIGITAL OR NATIONAL REVIEW, YOU CAN SIGN UP FOR A SUBSCRIPTION TO NATIONAL REVIEW here OR NATIONAL REVIEW DIGITAL here (a subscription to NR includes Digital access).

Most Popular

The Pollster Who Thinks Trump Is Ahead

The polling aggregator on the website RealClearPolitics shows the margin in polls led by Joe Biden in a blue font and the ones led by Donald Trump in red. For a while, the battleground states have tended to be uniformly blue, except for polls conducted by the Trafalgar Group. If you are a firm believer only in ... Read More

The Pollster Who Thinks Trump Is Ahead

The polling aggregator on the website RealClearPolitics shows the margin in polls led by Joe Biden in a blue font and the ones led by Donald Trump in red. For a while, the battleground states have tended to be uniformly blue, except for polls conducted by the Trafalgar Group. If you are a firm believer only in ... Read More

Election-Meddling Redux

It is not an attack on the American election. It is an influence operation aimed at the American media, using the $60 billion per annum American intelligence apparatus to pull it off. And it’s working. On Wednesday night, it was suddenly announced that U.S. security services would conduct a press ... Read More

Election-Meddling Redux

It is not an attack on the American election. It is an influence operation aimed at the American media, using the $60 billion per annum American intelligence apparatus to pull it off. And it’s working. On Wednesday night, it was suddenly announced that U.S. security services would conduct a press ... Read More
Culture

Equality and Envy

We are not the same. Neither men, nor women, nor races, nor ages, nor nationalities, nor in wealth, nor in training, nor in beauty. We are not equal in any way. And that is a reason to be proud and happy, because at the end of the day we are human and not the product of some factory. Let us once and for all ... Read More
Culture

Equality and Envy

We are not the same. Neither men, nor women, nor races, nor ages, nor nationalities, nor in wealth, nor in training, nor in beauty. We are not equal in any way. And that is a reason to be proud and happy, because at the end of the day we are human and not the product of some factory. Let us once and for all ... Read More
Film & TV

Bill Murray: The King of Cool

Bill Murray’s Bill Murray impression is priceless in On the Rocks, the way John Wayne did a fantastic John Wayne parody in True Grit and Al Pacino found a new level of Pacino-ness in Scent of a Woman. I want to quote every line of dialogue Murray delivers in his new movie for Apple TV+ -- every hilarious piece ... Read More
Film & TV

Bill Murray: The King of Cool

Bill Murray’s Bill Murray impression is priceless in On the Rocks, the way John Wayne did a fantastic John Wayne parody in True Grit and Al Pacino found a new level of Pacino-ness in Scent of a Woman. I want to quote every line of dialogue Murray delivers in his new movie for Apple TV+ -- every hilarious piece ... Read More