One of the consolations of the recession has been the low gas prices that helped us through the winter and much of the spring. In recent weeks, that small respite has ebbed away ”“ just in time for the summer driving season.
Gas prices this week hit a nationwide average of $2.62, just about a dollar higher than the low point at the end of last year. In some parts of the country, prices are edging toward $3 a gallon.
Higher prices at the pump could chill consumer spending and business investment. But conservation might be an effective strategy for limiting the damage.
Demand for fuel is hardly booming. Many experts are sure that because of the slack demand, we won’t even approach last year’s ruinous prices, and that prices will flatten out not much above where we are right now.
In part, the rising prices are a measure of economic optimism. Oil has risen to nearly $70 a barrel on the expectation that a growing recovery will raise demand for oil. Other factors also play a role, including the weak dollar, and refinery slowdowns as producers switch to summer fuel blends.
Many other factors contribute to the price of a gallon of gasoline, including taxes. Fuel taxes are the primary source of revenue for road maintenance and improvements financed by the federal Highway Trust Fund and state governments.
The trust fund does not have the money to meet transportation needs. If the economy strengthens, a hike in the gasoline tax might be advisable to cover the high costs of maintaining our road network. As fuel efficiency has improved, motorists have been paying less and less ”“ on a per-mile basis ”“ toward the maintenance of the roads they use.
The administration has refused to endorse a gas tax hike for fear that it would hit low-income Americans the hardest. As long as the economy remains sluggish, it will be hard to raise this tax, but we can’t avoid paying our bills forever.
With a good economy, what is a tolerable price for gasoline? When gas rose above $4 last summer, traffic remained relatively strong. We wouldn’t like it, but perhaps paying more for gas could be the basis for a better transportation policy.
Our lives and economy revolve around roads, automobiles and gasoline. Rising costs will inevitably encourage us to consider investing in efficiency and alternatives.
— Questions? Comments? Contact Kristen Schulze Muszynski or Nick Cowenhoven at 282-1535 or kmuszynski@journaltribune.com or ncowenhoven@journaltribune.com.
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