Saturday, June 14, 2008

Oil Pumping Is Like Highway Building: More Is Not A Solution

You can't build your way out of highway congestion by adding more lanes. All you get is induced traffic, and more motorists.

Similarly, you can't drill your way to more oil and expect the price to drop, as some hope will happen now that Saudi Arabia may increase oil production.

Psychologically, that may cause oil prices to dip - - temporarily. But adding supply will only stimulate more driving here, and certainly more buying for motorists being added by the thousands daily in China and India, to name but two expanding markets.

Throw in a falling dollar and speculation, and, well, forget it.

Alternative energy production, conservation, transit expansions - - these will reduce consumption, and air pollution, too.

Don't be fooled by the Saudi oil ploy, if it happens. The Saudi royal family will still scoop up more US consumer dollars, and in the end, gasoline prices will respond to the increased - - I'd argued induced demand - - and prices will soon be higher than they are now.

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