Exclusive: On the Further Cost of Rising Fuel Prices

by BRUCE C. MARTIN, MPP July 15, 2008

The negative economic effects brought on by the prospect of continued, huge increases of worldwide crude oil prices is so unpleasant that it defies imagination. As was demonstrated in the 1973 oil embargo, when average retail prices nationwide nearly doubled from $.25 - $.45/gallon in one day, a determined effort by terrorists or decisions by an unfriendly oil producing government would be enough to produce continued, costly results for the citizens of this country. Wishing away likely bleak conditions will not eliminate the duty on the part of policymakers to develop contingency energy policies.

For the average 40 hour/week worker who commutes to work daily as a single motorist, the increases in fuel prices from last year's previous average price of $2.40/gallon to over $4.50/gallon and possibly higher (prospects of up to $7.00/gallon before 2009 have been mentioned) would lead to an inability to fuel up and unavailability to report to work unless their employer(s) made alternative transportation arrangements. There would be enormous effects on delivery of private goods and services, and force major budgetary cut backs by municipal and county public safety agencies.

As a resident of California, it does not take much imagination to recognize that much of the state's primary economic sectors would be heavily impacted with continued massive increases in fuel prices caused by various worldwide matters, such as increasing terrorist activities anywhere in the oil producing world (such as Nigeria, Saudi Arabia, Kuwait, Oman, or Iraq), or other problems such as weakened U.S. currency. As the retail price per gallon continues upward, economic pressures on businesses and citizens would be immense. Accompanying this could be disruption in delivery of vital services, and possible civil unrest.

A focus on three key sectors of California's economy would include the following effects:

SOURCE: Prepared by author.

With this economic analysis, what energy/fuel policy should the United States follow?

POLICY:

Extensive effort is underway throughout all areas of government as well as private industry to determine best practices related to energy production, refining of fuel, conservation efforts, and how these can fit into the overall mosaic of rising energy costs. Developing a comprehensive and integrated national energy policy to reduce this country's dependence on foreign oil should be the ultimate public policy goal.

All interested parties should be invited to participate in this nationwide discussion. Decision makers must remain open to any and all suggestions, and should be willing to immediately provide economic support and tax incentives for those with entrepreneurial inventions or solutions. And, the President of the United States, acting in his capacity as Commander-in-Chief, must express in clear, unambiguous language that the United States will protect its national security interests (particularly relative to worldwide energy production) and those of its allies with the full backing of its military.

For states such as California, their Governors must conduct a detailed examination of potential problems due to rising fuel costs, and be prepared to step in immediately where necessary. This would include but not be limited to the following suggestions:

• Immediate planning by California Department of Transportation (CALTRANS) to build regional as well as statewide mass transit, crossing over-riding jurisdictions, with introduction of appropriate emergency legislation where necessary
• Provide educational messages to citizens regarding handling of rising fuel prices, with recommendations on alternative transportation and methods to organize local ride sharing programs
• Implementation of a statewide strategic oil reserve similar to that maintained by the federal government
• Promote through research grants and tax deductions the development of alternative fuels as well as search for as yet unknown oil deposits/reserves
• The Governor have in his possession at all times an emergency declaration of martial law in case of civil unrest/disobedience (i.e. "wildcat" trucker's strike, aka: "Key Off") due to high fuel prices

Failure to provide for sufficient relief in both the private and public sectors could lead to an unavailable work force(s) for public safety, agriculture, manufacturing, transportation, tourism, etc. It could cause a reduction in the overall Gross Domestic Product for this nation which might be too severe to ever recover from.

FamilSecurityMatters.org Contributing Editor Bruce C. Martin, MPP, is the commander for the Marina (California) Police Department Support Services Division and a professional firefighter. Feedback: editorialdirector@familysecuritymatters.org