High gas prices a problem of supply and demand

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By The Staff

Your recent article “pain in the wallet” accurately enumerated the problems high fuel prices cause for the residents of Henry County; we now need to discuss why.

The simple answer to high cost is easy: supply and demand. Lots of people worldwide want fuel, with China wanting more everyday, but supply is not keeping up with demand. The result is high prices. We can all do our part to conserve, but we can also conserve our way into an economic depression. Henry County is most vulnerable to this, as fewer people will be willing to live here and drive to jobs in Louisville. Employers will be less likely to locate in Henry County due to the high cost of transporting goods to population centers.

So you and I can conserve, and affect demand, but who can affect supply? Politicians, that’s who, and they need to hear from us. President Bush has lifted the ban on offshore drilling, but the Democrat Party controlled House has refused to do the same. The excuse is that oil companies have many unused oil leases, so we won’t give them more. Having worked for a Texas conglomerate, that owned an oil company, I learned one simple fact: if a lease is not being used it is because it is not economical to do so. The offshore fields have proven oil reserves. Other countries are drilling off the coast of the United States today; does it make sense that we ban ourselves from drilling as fuel prices soar?

The Democrat Party arguments against drilling are many; let’s examine a few:

1.) “It will take 10 years to make an impact.” Wrong. If we know where the oil is (we do), oil could be flowing in less than a year or two. Even if it did take more time, do we tell our kids not to get an education because it takes too long?

2.) “Prices are only high due to ‘speculators.’” Wrong. Investors/speculators base what they are willing to pay on supply and demand. If they see supply will increase the price will drop; it’s called economics!

3.) “We need to find ‘alternative energy.’” I agree. Unfortunately, this is one area that will take time but we need to start today. The media has everyone scared of nuclear power, yet it is safely used in many parts of the world; France produces nearly 80 percent of its electricity with nuclear plants. In the meantime we can use coal (from Kentucky) instead of oil. Government-subsidized ethanol from corn? Sure, but do you wonder why food prices are rising? Corn is food; does it make sense to use it for energy?

4.) “Offshore drilling will pollute our waters.” Wrong. The technology is in place to conduct nearly pollution-free drilling. More oil spills are made by tankers importing oil than by drilling.

I’m a registered Democrat who’s rapidly losing patience with the Party. I have kids who will someday need jobs; a country without energy won’t provide them.

Fleet Smith