THE BLOG
04/29/2011 04:51 pm ET Updated Jun 29, 2011

Drilling and Gas Prices: A Teaching Moment

Here we go again. With gas prices spiking, oil companies and pandering politicians are once again arguing that it's time to open up more coastal areas and Alaskan wilderness to drilling.

Self-reliance is a strong American value, so it's no surprise that such talk resonates with people who are feeling pain at the pump.

Too bad it's just a dream to think that increased domestic production will lower gas prices. Those prices reflect the global oil market and changes in U.S. production are too small to influence the larger picture of supply and demand. For example, the U.S. Energy Information Agency has estimated that opening up coastal areas to offshore drilling would only increase domestic production by 500,000 barrels a day. That's not much oil given that the world currently consumes 89 million barrels a day.

The biggest factor driving oil prices higher -- now and into the future -- is increased demand from developing nations. China's oil consumption has nearly doubled since 2001 and may well double again in the next decade, to the point that China consumes as much oil as the United States. India's oil consumption has risen 50 percent since 2001. Brazil is also using a lot more oil.

The current oil spike has much to do with events in the Middle East, and especially the civil war in Libya, an important oil exporter. But another trend of recent months is that China's economy is once again blazing away, with annualized GDP growth of nearly 10 percent. Once the global economy overall bounces back, oil prices are likely to return to some of the highs we saw before the financial crash even if the Middle East returns to calm.

An insatiable global demand for oil, along with higher prices, is the new reality and domestic drilling isn't going to change this big picture. So isn't it about time our politicians just told us this truth?

Now, I can understand why conservative leaders might want to dodge reality, since they don't want to bolster the case for tougher fuel efficiency standards or more public investments in mass transit or clean energy. The GOP also gets lots of money from the oil industry, which has much to gain from more drilling and much to lose from clean energy.

But I would hope that President Obama would more clearly spell out the truth that high gas prices are here to stay. Instead, at different junctures, Obama has implicitly embraced the myth that boosting domestic production can help solve our energy problems -- like when he called for opening up coastal areas to drilling just before the BP spill in the Gulf of Mexico.

With the President getting bashed on gas prices -- John Boehner joined Donald Trump, Tim Pawlenty, and other Republicans in calling for expanding drilling -- it seems only a matter of time before Obama once more says something accommodating about the need to boost domestic production. It would be an easy way for the President to show that he is trying to solve the gas price problem and that he feels people's pain.

Such comments would muddle an important teaching moment. The real solution on gas prices, as Obama knows, is to increase the fuel efficiency of the U.S. vehicle fleet -- which, as he has noted, accounts for 70 percent of all oil consumed in the United States. Far more efficient vehicles would not just reduce demand for oil, but cushion drivers against rising prices. After all, my bet is that people who own hybrid vehicles -- or, better yet, electric ones -- are barely paying attention to this whole ruckus about gas prices.

President Obama has already taken big steps to increase fuel efficiency standards for cars and trucks. Do most Americans know that? Probably not and Obama should talk about his accomplishments here.

Also, this is a golden moment to push mass transit. Even as gas prices spike, Republicans in Washington and the states are busy whacking away at budgets for mass transit, including gutting funding for high-speed rail. The President should point out the absurdity of this. If the United States started making serious investments now in high-speed rail, travelers would have more alternatives in a future where motorists may routinely pay over $5 a gallon for gas.

The President gets all this. In his weekly radio address last Saturday, he touted his fuel efficiency standards and the importance of hybrid vehicles, and also called for getting rid of tax subsidies for oil companies.

Still, he needs to be bolder in telling Americans a truth they don't want to hear: Gas is going to be expensive, so let's deal with it.