Commentary: Is cheap gas a good thing?

This editorial appeared in The (Raleigh) News & Observer.

Can't say the oil companies haven't delivered their share of holiday cheer. Gasoline prices are now so low – in the $1.50-$1.70 range – that if those figures had been posted during sky-high July, we'd have guessed ExxonMobilShellBP had begun pricing its product by the quart.

How long these prices will last is another question. OPEC, for one, is not pleased. The cartel's members are aiming to cut oil output by a record 2.2 million barrels a day. The goal is to put upward pressure on prices, lest the oil oligarchs be reduced to subsisting on $40-a-barrel oil. The Saudis say $75 might be fair. (The price was $140-plus in July.)

Production cuts, however, may not do the trick if the world economic outlook remains ultra-gloomy. Americans, caught in a severe downturn in which $1.50 gas is a lonely bright spot, could find ourselves hoping for an uptick at the pump. It might signal a higher-octane economy ahead – maybe.

What's certain is that low oil prices are a disincentive to drilling, to refining and to adding capacity to the worldwide system for processing oil and natural gas. All over Planet Petroleum, a slowdown has hit. This is worth pondering by those who, just recently, thought only of "Drill, baby, drill!"

The hard lesson is that market forces and the Middle East largely determine the price we pay. Regulations on drilling in the United States – the rules the Republican National Convention railed against – are a far smaller factor.

To read the complete editorial, visit The (Raleigh) News & Observer.