By failing to account for inflation, the media have some Americans so alarmed that they can't think straight. "What costs more," I asked customers at a gas station, "gasoline or bottled water?" The answer I got from almost everyone was gasoline. At that very gas station, water was for sale at $1.29 for a twenty-four-ounce bottle. That's $6.88 per gallon, three times what the station charged for gasoline. It gets sillier. I asked gas station customers, "What costs more, gasoline or ice cream?" Again, most people said gasoline cost more. But at $3.39 a pint, "premium" ice cream costs about $27.00 a gallon.
We should marvel at how cheap gasoline is-what a bargain we get from oil companies. After all, it's easy to bottle water, but think about what it takes to produce and deliver gasoline. Oil has to be sucked out of the ground, sometimes from deep beneath an ocean. To get to the oil, the drills often have to bend and dig sideways through as much as five miles of earth. What they find then has to be delivered through long pipelines or shipped in monstrously expensive ships, then converted into three or more different formulas of gasoline and transported in trucks that cost more than $100,000 each. Then your local gas station must spend a fortune on safety devices to make sure you don't blow yourself up. At $2.26 a gallon (about forty-six cents of which goes to taxes), gas is miraculously cheap! But what we heard from the clueless media was, "Gas prices are at record highs!" MYTH: We are running out of oil fast.
TRUTH: Not so fast!
"It's going to be a catastrophe!"
When they're not complaining about the price of gas, doomsayers would have us believe that we are burning oil at an "unsustainable" rate.
Camera-hungry politicians know that predicting doom gets them TV face time. "It's inevitable that this is just the beginning of this gasoline crisis!" Senator Charles Schumer told me, as Hurricane Rita approached landfall in 2005. The New York Democrat is notorious for his hunger for media coverage. (A Washington joke: Where is the most dangerous place to be? Between Chuck and a camera.) Schumer told me that after Rita hit, the price of gas would rise to "five dollars a gallon."
He was eager to spend your money to cure his panic. Schumer wants a new "Manhattan Project" that would use huge amounts of tax money to fund "independent energy sources." I reminded him that the last time government tried that, it wasted billions on the totally failed synfuels project. That was a $20 billion Carter administration plan to develop a cheap way to make synthetic natural gas from coal. Schumer said that synfuels was a failure because "political leaders" chose it, but this time Congress would have "nonpoliticians" decide which projects to fund.
Sure they would.
If nonpoliticians are going to decide which projects to fund, why do we need Chuck Schumer? We already have a system in which nonpoliticians decide what projects to fund. It's called "the market."
If the price of a barrel of oil stays high, lots of entrepreneurs will scramble for ways to supply cheaper energy. They'll come up with alternative energy sources or better ways to suck oil out of the ground. At fifty dollars a barrel, it's even profitable to recover oil that's stuck in the tar sands in Alberta, Canada. Peter Huber and Mark Mills point out in their book The Bottomless Well that those tar sands alone contain enough oil to meet our needs for a hundred years.