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News Eagle - Hawley, PA
  • Gas prices are up again

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  •     Have you noticed gas prices inching up? Average gas prices across the country are up approximately 17 cents a gallon since last year this time. This, while total production of energy in the U.S., including fracking, was up more than 20 percent last year. And, surprise, surprise, we are now an oil-exporting nation.
        So why wouldn’t gas prices at the pump go down? We have been told for years that supply and demand sets gas prices. They tend to go up in the summer with higher demand and down in the winter when folks stay home and drive less. Doesn’t supply and demand still control the price of gasoline at the pump?
        Blame it on the Russians. As the Russian noose tightens on the Ukraine, the U.S. and its European allies are attempting to pressure Russia to back off by threatening economic sanctions. However, Russia has a trump card to play. They supply about 30 percent of Europe’s energy needs. If the European allies and the U.S. follow through with economic sanctions, the Russians have threatened to shut off oil supplies to Europe.
        Can Russia afford to do that? Currently, about half of Russia’s exports are energy related, and a significant portion of that goes to Europe. Can Russia afford to walk away from that income without creating major economic repercussions at home? Without replacing that huge marketplace for their products, it isn’t likely. However, on the other side of Russia is China, the fastest-growing economy in the world. The Chinese are constantly searching for new energy sources to meet their needs. China has increased its oil production each year since the 1970s but still doesn’t produce even half of the 3.5 million barrels of oil they need to fuel their economy each year. And they are projecting that their needs will double by 2020.
        So guess who is on site in China right now negotiating a new trade agreement. OK, that was too easy. Suffice it to say that Russia can, indeed, cut off Europe from 30 percent of their energy resources. China will be all too pleased to step into that void and replace Europe as the largest receiver of Russian oil resources.
        So how does that affect us here in the U.S.? To ease the concerns of Europe, the U.S. has countered by offering a larger portion of our oil resources to the European allies. It’s a long way to go to get the answer to the higher gas cost question. But the end result on the home front is fewer gas reserves in the U.S. generates higher prices at the pump. So blame the Russians.
    Page 2 of 2 -     Dr. Mark L. Hopkins writes for More Content Now and Scripps Newspapers. He is past president of colleges and universities in four states and currently serves as executive director of a higher-education consulting service. Contact him at presnet@presnet.net.

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