How about politicians and special-interest groups trying to solve it?
The past few days have been chock full of bad ideas floating around.
Worst among these (and that’s a close call) is a bill sponsored by a trio of House Democrats in Washington that would send every American a monthly check when gas averages more than $4 a gallon during the month.
The Gas Rebate Act of 2022, sponsored by Mike Thompson, D-Calif., John Larson, D-Conn., and Lauren Underwood, D-Ill., would give every adult $100, plus $100 for each dependent, per month.
A lot of factors likely contribute to high gas prices. Supply and demand is the main factor, however, with the boycott of Russian oil recently adding to the problem. Biden administration policies put a freeze on new oil drilling leases on public land, and while most drilling occurs on private land, every bit would help. But it takes time to ramp up supply.
Still, Washington had a lot to do with inflation in general, while trying to solve other problems.
It may be useful to remember that last fall, the Federal Reserve Bank of San Francisco released research suggesting inflation could be traced in part to the $1.9 trillion coronavirus relief package that the Biden administration had pushed into law early in 2021.
The Biden-era stimulus money, of course, came on the heels of stimulus bills passed under the Donald Trump administration at the beginning of the pandemic. Together, they poured trillions into the economy.
Dr. Joshua Robinson, a professor of economics at the University of Alabama at Birmingham, told WBMA in Birmingham, he thinks the stimulus money was necessary during an unusually difficult time, but that with all the extra money floating around, prices went up.
The Rebate Act would add even more money to the economy, even though it would lead to some delicious ironies. As the Wall Street Journal put it, “the spectacle of climate-change warriors suddenly trying to subsidize fossil-fuel consumption is almost worth it.”
The second terrible idea is to return us all to 1975.
The International Energy Agency has proposed a 10-point plan for reducing the world’s consumption of crude oil, thus easing the shock of inflation at the gas pump while making the planet healthier at the same time.
Chief among its proposals is to reduce speed limits.
Specifically, it calls for a reduction of at least 6 mph on highways. But, because not all highways are posted equally, a 6 mph average reduction could be more like a return to 55 mph on interstates.
You may be too young to remember, but we’ve been down this (tediously slow) road before, and it didn’t work. Spurred by the oil crisis of the early ‘70s, Congress decided to withhold federal highway funds from any state that didn’t impose a 55 mph upper limit. The idea was to save gas, but it soon morphed into a way to make highways safer. Neither worked well.
It’s not that the science of gasoline consumption was wrong, it was that Americans generally didn’t follow the slow speed limits unless they knew a cop was nearby.
For the first seven years, the fatality rate barely budged. It started to fall in the 1980s due to other factors, mainly safety features and better constructed roads, and that downward trend continued long after Congress let speed limits rise again.
Highway experts tell me the biggest factor contributing to highway accidents is the variability of speed — that is, people driving at vastly different speeds on the same road. Given the number of people now driving at more than 100 mph, slower speed limits would make highways less safe.
And if history is any guide, it would make people angrier, as well.
I should mention that the International Energy Agency also suggests large cities impose “car-free Sundays.” Yeah, people will love that.
The third bad idea of recent days is one I wrote about before — temporarily removing the state’s gas tax. Some Utah politicians have talked about this. Other states already have done it. As I said earlier, you can’t fool supply and demand. Prices won’t come down much just because you remove taxes.
The hard truth is that there is no quick solution to higher gas prices. Supply has to somehow exceed demand. The war needs to end. Inflation must be controlled. Those are hard things.
That’s not what politicians like to hear. It’s not what regular folks want to hear as they fill up their cars. But quick fixes generally make things only worse.