Low Cost Fuel: Good or Bad for Americans?

Lower fuel prices benefits most working class Americans but there is a price point at which reducing fuel prices further will no longer be beneficial for America’s economy. What is that price point? Essentially it is the price point which undermines America’s efforts to gain and maintain energy independence. At some point, let’s us $60 per barrel of crude oil, it is no longer profitable to develop America’s oil resources. Keep in mind that depending on the source of the oil, the price of oil development and production may require higher prices or even remain profitable at prices below the $60 per barrel price. For example, offshore oil exploration will stop without oil prices at $100 or more per barrel. How much of an impact on America’s efforts to gain energy independence will the elimination of offshore exploration have? Maybe little or none but that is an issue which needs to be addressed separately.

If America is to remain the Land of Opportunity, America’s economy must be vibrant and growing. If America’s economy is to grow, it requires secure, stable and affordable energy. Today, the cornerstone of energy is oil. Maybe, someday oil will lose its importance but not today or in the foreseeable future. Right now, whatever country or organization controls America’s oil supplies, controls America’s economy. If Americans are to enjoy the benefits of secure and readily available employment, Americans are going to have to have a reliable, stable, secure and affordable supply of oil. A strong, expanding American economy requires America to produce the oil it needs which will protect America’s economy from the influence of other countries.

Environmental extremists promote a complete World wide elimination of fossil fuels. No doubt, if modern society were to eliminate its reliance on fossil fuels, the exchange of carbon between Earth and Earth’s atmosphere would be more closely balanced. But, not solely due to the elimination of fossil fuels. Since modern society cannot exist without fossil fuels, their elimination is essentially a suicidal choice for modern society. Mankind could no longer support Earth’s current population, much less the continuation population growth. This is not a world many people would want to live. That said, Americans must assume the responsibility of undoing the damage which resulted from the Industrial Revolution as well as minimize the damages currently being done to Earth’s atmosphere by developing countries. This is a far more difficult problem than can be resolved by Americans forgoing the American life style which will occur if America does not develop all its natural energy resources.

Returning to the question: Is low cost fuel good for Americans? Absolutely but at some point lowering fuel prices will be more harmful than beneficial for America’s economy. Furthermore, it is just as important to the wellbeing of working Americans that fuel prices are not only low but stable. America’s energy policy needs to include a target price range for oil. If oil prices fall below or exceeds the target price range, appropriate actions will be taken to bring oil prices back in line. An example might be tariffs on low cost oil imported from countries trying to undercut America’s efforts to become energy independent. This would stabilize America’s energy costs at a level which could result in a vibrant American economy.