Environmentalists Quietly Welcome High Gas Prices
RENEE MONTAGNE, host:
Oil prices closed above $74 a barrel yesterday.
You might think that's good news for Saudi Arabia, but Saudi oil minister Ali al-Naimi says rising oil prices are disruptive for his country, too.
Minister ALI AL-NAIMI (Minister of Petroleum and Mineral Resources, Saudi Arabia): Prices of these barrels are not in the interest of either Saudi Arabia or the U.S. Our common goal is an oil price level that protects consumers while at the same time ensuring adequate investment.
MONTAGNE: The Saudi oil minister spoke yesterday at the Center for Strategic and International Studies in Washington, D.C.
American politicians are also talking about ways to reduce oil prices. But many economists say cheaper gas would only increase America's self-destructive fuel addiction.
NPR's Elizabeth Shogren reports.
ELIZABETH SHOGREN reporting:
Economist Philip Verleger says gas prices should double.
Mr. PHILIP VERLEGER (Institute for International Economics): Fundamentally, the price in gasoline in the United States should be much higher than it is today, probably around $7 or $8 a gallon.
SHOGREN: Lots of economists, like University of New Hampshire economics professor Richard England, agree gas is too cheap.
Professor RICHARD ENGLAND (Professor of Economics, University of New Hampshire): People underestimate how costly it is to drive their motor vehicles because a lot of the cost to society from gasoline use are not included in the pump price.
SHOGREN: England ticks off some of those costs to society: Americans suffer 40,000 deaths and millions of injuries each year from traffic accidents.
Prof. ENGLAND: We have a lot of regional air pollution problems. We have a lot of lost time from traffic congestion.
SHOGREN: U.S. leaders need to craft their foreign policy decisions to make sure oil keeps flowing from unstable regions of the world. And cars contribute to global warming, which, in time, could be enormously costly.
Douglas Holtz-Eakin worked at the intersection of academics and politics. His last two jobs were director of the Congressional Budget Office and chief economist of the White House Council of Economic Advisors. He says his old bosses need to face an unpopular truth.
Mr. DOUGLAS HOLTZ-EAKIN (Former Chief Economist, White House Council of Economic Advisors): If we really want to make a commitment to a future where we are not addicted to oil, regardless of its source, then a high price is the only way to do that.
SHOGREN: Holtz-Eakin says prices might not have to double, but they'd have to stay high the way they did after the oil embargo of the 1970s. Back then, people traded in big sedans for compacts and businesses slashed energy use.
Right now, people think prices might just fall again.
Mr. HOLTZ-EAKIN: The question is will we get the sustained high prices that give people an incentive to actually buy a different car instead of just riding it out with the big gas guzzler that they've got.
SHOGREN: But how do you make sure prices stay high? The economists agree the most reliable way is to put a big tax on them. They know that could hurt. Most economists call for some kind of assistance to low-income Americans, like lowering other taxes or buying back gas-guzzling cars.
Now, environmentalists also want Americans to cut fuel use. They agree that the true cost of oil isn't reflected in pump prices. But most environmentalists, like David Friedman and the Union of Concerned Scientists, don't want a higher gas tax. For one thing, it's not going to win them any friends.
Dr. DAVID FRIEDMAN (Clean Vehicles Research Director, Union of Concerned Scientists): In the United States, it's actually pretty much a political dead horse to even think of raising gasoline prices.
SHOGREN: And besides that, they say it won't work. Americans have more money than they did in the 1970s, so they can afford not to change their behavior because of high gasoline prices.
They often can't drive less, because driving is the only way they can get where they need to go. And the only vehicles that suit their lifestyles drink lots of gasoline.
Dan Becker, of the Sierra Club.
Mr. DAN BECKER (Director of Global Warming Program, Sierra Club): That's why we need good old-fashioned regulations that require automakers to put better technology on their vehicles, because they aren't putting it on in response to higher gas prices, and the American people are buying what they're offered.
SHOGREN: The environmentalists say the government should require auto manufacturers to sell cars that, on average, get 40 miles per gallon. New cars sold in Europe already get that kind of mileage.
Economists say that's the best argument for gas taxes. Europe doesn't have fuel efficiency standards. The main reason cars there use so little gas is that gas has been really expensive in Europe for decades--because of hefty gas taxes.
Elizabeth Shogren, NPR News, Washington.
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