Charleston Daily Mail | October 27, 2014
The article in last Wednesday’s Daily Mail by Jared Hunt, “W.Va. gas prices fall below $3,” serves as a simple primer in basic economics.
“Gasoline prices have dipped below $3 in some parts of West Virginia, as prices fall to their lowest levels in nearly three years,” the story reported.
“We are producing a lot and we’ve got good supply,” said Jan Vineyard, president of the West Virginia Oil Marketers and Grocers Association.
Later in the story when explaining why fuel prices in the Cross Lanes area, which has several different retail chains competing for commuters, are generally lower than other parts of West Virginia, she said: “The more competition you have typically produces the most impact on price.”
Hear hear. Adam Smith’s Invisible Hand theory at work some 255 years after the British economist first published it.
Lawmakers at the state and national levels would do well to brush up on Smith’s economic theory to promote, rather than inhibit, more economic growth through policies that encourage competition and investment.
The fact is, everyone in America loves lower gasoline prices. And we are finally getting them because oil and gas drillers in the United States are producing more oil here - in North America - than we have in 26 years.
Why? Because of the use of new technologies brought on by advances in hydraulic fracturing, drillers can get to oil and natural gas reserves that previously were unobtainable. This is helping the United States become more self reliant on energy, rather than relying on unstable hot spots across the globe.
And consumers are, believe it or not, becoming more efficient.
“A country can achieve energy independence through two channels -- it can either produce more or consume less, and the United States is doing both,” James Brick, a senior analyst at Wood Mackenzie, said in a statement last week, according to UPI.com. Wood Mackenzie is a global energy research and consulting group.
Sure, the price of crude oil, which accounts for about two-thirds of the price of gasoline, is cyclical and will eventually go up again, but the United States is still better off than before.
In the four years of the shale drilling boom, drillers have gained efficiency, increasing their productivity per rig more than 300 percent, says the Manhattan Institute’s Mark Mills in Friday’s Wall Street Journal.
Meanwhile, lower fuel prices mean more money in everyone’s pocket.
“The decline in gas prices has helped consumers save more than $200 million a day on gasoline since the summer,” said AAA spokesman Michael Green.
The nation’s economy has been in a very weak recovery since 2009. Encouraging more energy independence can speed and strengthen that recovery.
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