The painful days of July seem like ancient history.
Gasoline prices near $5 a gallon.
It was traumatic just to go to the pump.
Yesterday, after filling up my car, I looked at the pump register. I thought there was a mistake. Less than 40 bucks to fill my tank.
That had to be wrong.
During the past week, the national average price for unleaded regular fell by 16 cents to $2.18 per gallon. Retail gasoline stations are reporting prices under $2 a gallon throughout Texas — the lowest levels seen since January 2007.
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Mixed Feelings
While consumers are worried about a weak job market and slumping investments, they're grateful for the price relief.
This latest decline comes just ahead of a report from the International Energy Agency, which some analysts expect will cut its 2009 oil demand forecast for the third consecutive month. Industry analysts had expected China and India to continue buying crude if the U.S. and other Western nations went into recession, but the booming economies of Asia have begun to show signs of fatigue.
Events that earlier this year threatened to cut off supply in oil-producing nations no longer appear to have the power to send prices upward. Prices this week fell even as militants in Nigeria resumed attacks on the country's oil installations. Despite his best efforts, the always inflammatory Venezuelan President Hugo Chavez has been unable to lift prices at the pump.
How Consumers May be Hurt
Amid the otherwise dismal economic news, all of us welcome the price relief. Ultimately, however, falling pump prices may hurt the American consumer.
If we are going to encourage Americans to buy fuel-efficient or alternate energy vehicles, they won't be motivated to do so when gasoline prices are low.
Most of us remember 1973 and 1974, when oil prices skyrocketed from $2 a barrel to $20 or $30 a barrel. We said it was the end of the world as we knew it. But when it was all said and done, Americans went back to their gas guzzling ways.
Just the Facts, M’am
I don't want to kick GM or Ford while they're down. And I certainly believe that the American consumer deserves a break. But if we are going to get the green fuel efficient vehicles that we need to help us avert a similar crisis, we can't do it when gasoline is only $2 a gallon.
I hate to be the wet blanket at the party, but maybe this might be the right time to impose a national green tax on gasoline. If we're planning to bail out the automakers anyway, why not use this money to defray the cost, and build in an actual retooling component of the industry.
Nobody was happy when gasoline prices were at their highs in July. But, we survived. Maybe if we impose a little pain now, we can avoid making the same mistakes all over again.
I don't know about you, but I'd rather we tax ourselves with the prospect of improving our transportation future, rather than run the risk of paying more to foreign oil barons who would like nothing better than to see us writhing in economy agony.
John Cohn is a senior partner at Globe West Financial Group, based on the Westside. www.globewestfinancial.com
