Higher Gas Prices are Coming – Part Two

March 7, 2011

By Judy Schropp Hoyer

It’s an economic law –  price is highly dependent upon the ratio of supply and demand.   There are other factors affecting the price of gas and oil for the consumer besides supply – the cost of getting it out of the ground, the cost of refining it, and  the cost of transporting it, plus the taxes and profit added on to those costs.   But, ultimately, it will come down to supply because supply actually is limited.  We will run out someday.  When?   Depends on how fast we use up the finite supply.   The population of the world is increasing, and China and India are not only growing in population but also supplying a larger percentage of their people with electricity.

It’s all a matter of time

There are about 6.9 billion people in the world now.  In 40 years there will be nine billion.  At our current rate of 87 million barrels per day, it’s estimated that we’ll run out of recoverable oil as soon as 2050. (Until then, prices will continue to rise.  Four dollars a gallon at the pump will be a sweet memory, much as 35 cents per gallon is now. 

I remember my mother pulling into a “service station” (this was the 1950s) and asking the man who came out to pump the gas and wipe the windshield and check the oil for “Two dollars of regular, please.”  We’d ride all week in our Ford station wagon on that. 

Then, in 1971 came a terrible rumor:  gas prices would go over a dollar in the next year.  It didn’t actually happen that year.  But then OPEC cut down on the amount it would supply the US and other countries – the “Arab Oil Embargo.”   After that came the “gas lines” of 1973 –  our first real scare.  After that the price of gas went up rapidly, and consumers were glad to pay it.

President Ford was in the White House then, but did nothing to curb our dependence on OPEC.  Nor did President Carter.   Nor any of them since then. 

 The last big scare

Our last big scare was 2008 when prices went over $4 per gallon.  In some places that summer, supply lines were interrupted by storms.  I was in Western North Carolina then.  If someone saw a gas station that actually had gas, that person would tell all his friends (after he’d filled up) and – even if my tank was ¾ full –  I’d go fill up, too.   Then, tell my friends.  Can you imagine living like that?  In my mind I pictured the poor Russian peasant women waiting in line at the bread store, then waiting in line at the butcher, then….  Or my own mother with her rationing stamps during WWII, trying to get sugar to bake my older brother’s birthday cake.   Think it can’t happen?    Then you’re not scared enough.

But maybe you should use less oil.

Editor’s note:  Judy Schropp Hoyer is an attorney, mother and organic farmer. She joins CWN with an occasional essay on the state of the world.