My Turn: Don’t blame Jimmy Carter or environmentalists for gas prices

By Ned Roberts
May 1, 2008

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On April 28, a reader wrote a My Turn guest column (“Why we’re going to pay $5 for a gallon of gasoline.) pointing the finger of blame for rising gas prices on Jimmy Carter and environmental regulation

He couldn’t be more wrong.

Carter was acutely aware of the need for a national energy policy. He made five major addresses on energy, and pressed the need to improve efficiency, increase conservation and find new sources of domestic energy. In 1980, Carter and the Democratic Congress passed the Energy Security Act of 1980. This bill created a comprehensive and coherent energy policy directed toward eliminating our dependence on imported oil.

Carter’s goals were clear: “Beginning this moment, this nation will never use more foreign oil than we did in 1977 — never. From now on, every new addition to our demand for energy will be met from our own production and our own conservation.”

Carter identified conservation as one element in this program, but also included investment in development of fuel from oil shale, from coal, from plants and from solar energy.

Similarly, environmentalists advocated supporting research on alternative fuel sources and improving conservation of energy. Without their efforts, we would be even more dependent on foreign oil than we are today, and gas prices would be even higher.

If Jimmy Carter and environmentalists cannot be accurately and fairly blamed, then who or what can be?

Well, Ronald Reagan can be. Taking office just a year after Carter’s speech, Reagan cut back or eliminated many of the initiatives that would have reduced our dependency on foreign oil. Lucky for him, there was a fall in demand for oil worldwide and the price of crude oil fell by 75 percent. Instead of continuing to invest in new technologies, we started building bigger cars again.

Rising demand for oil among emerging economies including China and India have also contributed. It has been said that if everyone on the earth wanted to live the American lifestyle, we would need five planet earths. And more and more people do want our lifestyle.

Concern over dwindling supplies is also a factor in rising prices. Producers want higher prices because they realize that the good times may not last forever. Speculators want to hold more of a scarce commodity, because its value increases as its supply diminishes. Some of the recent rise in prices is due to speculation.

But perhaps the biggest factor in increased prices for the U.S. is the fall in value of the U.S. dollar. Anyone who has traveled overseas recently knows that our dollar won’t buy as much as it used to. Where once a Euro was worth 93 US cents, it now takes $1.60 to buy one Euro. The price of a barrel of oil has increased only slightly when measured in “constant” U.S. dollars. If you discount that $4 a gallon you pay for gas today to when a dollar and Euro were of equal value, it would cost $2.50.

This raises the question of why the dollar has fallen. The “twin deficits” is the reason usually given by economists. The first deficit is the trade deficit — we import more than we export, and have for many, many years. This number includes what we pay for imported oil — and remember that Carter tried to cap our oil imports at levels seen in 1977.

The second is the budget deficit. George W. Bush came into office with the annual budget under control. By cutting taxes and starting a war without providing new funding, he has created huge deficits and increased the national debt enormously. Eventually, there were a lot more dollars out there and not as much appetite for them. Big supply, low demand equals lower value.

So the next time you fill up your tank, don’t blame environmentalists or Jimmy Carter. Blame yourself if you didn’t support research into new fuel sources, if you didn’t support conservation, if you voted for people who thought tax breaks during a war was a good idea.

Had we approached our national energy future with discipline and foresight, we would be exporting our technologies around the world and foreign oil would have a lot less importance.

Ned Roberts is a Truckee resident.