Hooray for higher gasoline prices

Retail gasoline prices have been creeping up in recent weeks in parallel with the rise of crude oil prices, and I think this is a very good thing. People are very wasteful of fossil fuel energy, and the only tried and true method of weaning people off of this addiction is to let them feel some pain, enough pain that they will change their behavior and switch to a more energy-efficient lifestyle. And, the anxiety over high energy prices will be "heard" by entrepreneurs who will flock to more energy-efficient technologies that have the promise of offering consumers new products and services that reduce or eliminate the dependency on old, expensive fossil-fuel energy.

I certainly don't look forward to seeing speculators reap windfall profits from the energy commodities speculation bubble,but if the result is lower per-capita energy usage and more efficient energy technologies, I'll take the tradeoff.

Unfortunately, every time we see a dip in energy prices, consumers and businesses feel a reduction in pain and back off and resume splurging on energy consumption. And, it makes it incrementally more difficult for entrepreneurs to raise capital.

The key here is the concept of an economic signal. Higher energy prices are an economic signal, telling consumers to cut their usage, and telling producers and entrepreneurs to come up with alternatives to satisfy demand.

The alternative is big, intrusive government that strong-arms consumers and bsuinesses into changes in behavior, but so often that approach doesn't work well anyway, and it basically says that consumers and businesses need to be treated like small children. My preference is to stick with economic signals.

-- Jack Krupansky