So what’s holding America back from a sensible public discussion about gas prices? In a word: impotence. The United States doesn’t hold the keys to its energy future. China and India do.
“We have to always remember – and its hard for Americans to remember this – but we’re competing in a world oil market,” said Chris Knittel, a professor of energy economics at the Massachusetts Institute of Technology in Cambridge.
For example, Republicans talk of opening the Arctic Natural Wildlife Refuge to development. But estimates suggest its yield "would be about 1 percent of world supplies on a per-day basis. That’s going to have a minuscule effect on prices, maybe it reduces prices 2 percent,” he says.
Even if the US boosted production by 50 percent, “that’s maybe a 10 percent reduction in prices. That’s not going to make Americans happy,” Professor Knittel says.
As AEI's Mr. Green points out, nearly 2 billion people in India and China will move up the economic ladder during the next several decades, bringing with them middle-class lifestyle expectations and attending hikes in energy usage.
“The long-term trend is there” for massive increases in long-term oil demand, Green said. “One person’s problem is another person’s blessing. The Chinese and the Indians want cars and mobility and would like to develop as economies.”
Americans, standing as the world’s largest economy and enjoying outsized influence in global affairs, aren’t used to being dependent on the actions of other nations.
“The markets we typically worry about are not global in nature,” Knittel said. “We’re not used to thinking in this world market mentality.”
