You know the best way to make people happy about paying three dollars a gallon for gasoline? Just raise the price to $3.25 for a few weeks then drop it back down. They curse, whine, and complain about the incredibly high price of gas, but then when the price comes back down to what they were paying a month ago, they feel some relief.
That’s the plot being perpetrated by the oil industry. We all know the oil industry’s profits have soared over the past couple of years. And we all know the oil exporting companies have reaped a giant windfall because of the inflated prices. And yet, when the price seems to drop a few pennies and stabilize for a couple of weeks, we still feel relief.
And that’s what the industry wants the consumers to feel. Gasoline has been roughly stable at just under three dollars a gallon for the past month or so. It’s far too high a price to pay, but when it spikes at $3.19 and then comes back down a few days later, we smile and pay it.
Now that British Petroleum has decided to close down the Alaskan pipeline due to corrosion, even though a small minority of our oil comes from that source, it will surely be the next excuse the oil industry will use to hike prices yet again.
If motorists are reluctantly willing to pay three dollars a gallon for fuel, it’s high time that fuel was switched to something other than imported petroleum. Indiana produces a great deal of coal. Although coal cannot be used to power internal combustion engines per se, it can be converted into a petroleum-like product through a process known as coal gasification. This can then be refined to produce gasoline that can power our vehicles.
Then there is ethanol. Indiana produces a lot of corn, and corn is one crop that can be used to produce ethanol, a type of alcohol that can be mixed with gasoline to power a so-called flex fuel vehicle. Flex fuel vehicles are becoming more common.
Gov. Mitch Daniels wants state vehicles to be flex fuel vehicles. He wants more ethanol plants to be built in the state. There have already been 11 built in the last year, with the twelfth and largest being built in Mount Vernon.
In the mean time, Wal-Mart is considering selling E85, the fuel mixture containing 85 percent ethanol, at its out-lot gas stations. If that happens, drivers will have ready access to the new fuel mixture nationwide.
Ethanol is not the perfect fuel. It is non-polluting and it burns efficiently enough. But some energy analysts claim it takes as much or more energy to produce a gallon of ethanol as we ultimately get from it. However, once mass production truly starts, and we begin using switch grass and corn stems to make ethanol instead of the grain itself, the energy balance should swing to the positive side.
Daniel’s energy plan, which also includes using more clean-burning coal from Indiana, will not only mean more abundant energy, but it will result in the creation of more Hoosier jobs. Indiana now gets only half its coal from within the state.
Of course, his plan has its critics, mainly from the Democrats. They say it’s a plan for the future, but that consumers need help now. They want the governor to eliminate the gasoline sales tax.
The problem with a sales tax on gasoline is that it is taken as a direct percent of total sales. That means the state gets more money when the price of gas is three dollars per gallon than when it was two dollars. In other words, as the price of gas goes up, the state reaps a windfall from its own consumers.
If the governor believes the state needs to maintain a sales tax, he should introduce a plan to the General Assembly that would charge sales tax based on the gallons consumed, not the price per gallon. In that way, the up-and-down vacillation in gasoline prices would not cause an equal swing in the amount of sales tax paid.
But at least the state is planning for its energy future. So are the country’s automakers, who have said they plan to produce more flex fuel vehicles in the coming years. And if giant national chains like Wal-Mart agree to start selling E85, it will eventually mean we will have relatively abundant fuel that won’t pollute the environment.
It will still cost three dollars a gallon or more. But we seem to be used to that price by now.