Price increases drive conservation, but who gains?

Recent price increases for fuel will no doubt drive conservation. The laws of supply and demand are driving up the prices and the market is successfully forcing us to conserve fuel. But, as usual, there is a flip side to the equation. First, the cost of producing most fuelstocks has not risen significantly. It certainly has not risen in concert with the rise in delivered fuel prices. Therefore, the owners and managers of the fuel supply infrastructure is making a whole lot of money off of the shortage.

In terms of conservation, the increase in price is good; it will force us to save energy. But what is happening to all of our money? Is it going to go into R&D for new sources of energy, or is it going into boats and resort vacations for the company owners (and billion dollar stock options for the managers)?

Since the money is coming from John Q., should he have a say in what is done with it? Where does public policy enter the picture? Should, perhaps, the increase in price go into a tax fund so that the money can be put back into use in the public interest rather than funding luxurious lifestyles for a bunch of would be oligarchs? Can this sort of enquiry be delayed for a couple of years by having the Justice Department conduct investigations to see if price gouging is going on?

The President on Peak Oil

THE PRESIDENT: "See, what's changed is the global supply for fossil fuels is outstripping the -- the global demand is outstripping the global supply, and so you're seeing a price of the feedstock of normal energy going up, and technology driving the price of alternatives down. And that's why this is a really interesting moment that we're going to see. It has changed a lot of thinking. The price of natural gas and the price of crude oil has absolutely made these competitive alternative sources of energy real. And the question is, do we have the technological breakthroughs to make it such that it can get to your gas tanks."

The above is a quote from President Bush's recent speech at the National Renewable Energy Lab. I guess he is contradicting the Vice President as Mr. Cheney was recently quoted as saying that conservation offers no solution to the energy situation. Or maybe not. Click here for a link to the complete text.