Cheaper Gas – A Double Edged Sword.

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In the last few months, gas prices have been cut in half. Like most people, I don’t mind paying less at the pump. But while lower gas prices are great for the wallet and I love saving money on gas, lower gas prices can also create a host of problems.

Increased fuel consumption is bad for the environment

Gasoline and Diesel require extensive refining before they are ready to power vehicles, and the production process produces nasty bi-products. Gasoline and diesel production is not as as simple as running barrels of crude oil through a processor. The oil must be drilled, refined, transported, refined again, transported again, etc. It is grossly inefficient and expends a tremendous amount of energy and chemical pollutants. Once delivered, the fuel is burned in vehicles which releases more pollutants – double whammy.

Cheap gas means less efficiency and technological advancement

When fuel is cheap, people don’t pay as much attention to how much they consume. Why should they when it doesn’t affect their standard of living? The addition of hybrid technology has slightly increased overall fuel efficiency in the last few years, but not as much as vehicle manufacturers would have you believe. In reality, overall fuel efficiency hasn’t increased very much in the last 2-plus decades. Between 1980 and 2004, fuel economy only increased 7%. A 7% increase isn’t bad, but from 1990 – 2005, fuel economy actually decreased. Surely we can do better than that.

Most car manufacturers claim they were giving the customers what they wanted, but they are also the same companies that are hurting now – because no one wants to buy their products. Cheap gas reduces the need to make technological advancements. My message to the manufacturers: “Change with the times – people want need more efficient vehicles.”

Increased fuel consumption means an outflow of US dollars

As we consume more fuel, we send more of our US dollars to oil producing countries, which increases our obligations to foreign companies and governments. I’m all for free and international trade, but I also know that the US is running an enormous trade deficit that we can’t maintain. One day in the near future these countries will want to collect and we may not be able to pay the bill – which means the value of the dollar could plummet.

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  1. Rene, I agree. SUVs and other gas hogs were extremely difficult to sell last summer when gs prices reached $4 per gallon. As soon as gas prices dropped, the gas hogs started selling again. It’s amazing how short term some people think. The gas prices are nice right now, but my bet is that they will be high again in a year or two.

    Thanks for posting my guest article, Dave. 🙂

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