POLITICO: The high price of uncertainty

April 18, 2011 by

My latest post in POLITICO’s “Arena”:

With continued turmoil in North Africa, increasing demand from developing nations and the American summer driving season quickly approaching, fuel prices have marched higher unabated. Just this week, AAA reported that the average price per gallon of gas nationwide has reached $3.81. It appears that we may be well on our way to reaching – if not surpassing – the highest national average ever recorded, $4.11, back in summer 2008.

And while the White House and the Congress can’t control political uprisings abroad or surging economic growth in other nations, they can certainly do quite a bit to help stabilize prices at the pump by offering political certainty.

A case in point is America’s abundant supply of natural gas. This clean-burning fuel provides a good example of how a regulatory environment can influence not only consumer cost, but also our energy security as a whole. It was just over a decade ago that countries such as Russia dominated the natural gas market. And Moscow’s willingness to use its gas reserves for political leverage (e.g., cutting gas off to Ukraine and therefore many Western European customers during New Year’s 2009) pushed global traders onto a roller coaster ride. Some analysts worried that the Kremlin – controlling 23.7 percent of the world’s gas reserves at that time – would become to natural gas what OPEC is to oil.

Thankfully, a revolutionary energy production process, combined with a supportive regulatory environment, saved Americans from that fate.

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