The Memorial Day holiday weekend marked the start of vacation season for millions of American families. Many of the 37 million Americans who hit the road reached deeper into their pockets than in recent years to fill up their vehicles. Gasoline prices are rising and are already about 52 cents higher than they were this time last year, threatening to put a squeeze on summer vacation plans.
The rising cost of gasoline is an indication that the chickens have come home to roost. In recent years, a combination of low commodity prices, regulatory overload, a sluggish economy, and high inventories of crude oil resulted in an extended period of low gasoline prices enjoyed by consumers. However, after years of slashed energy exploration budgets and fewer new production projects combined with an energy-hungry, rising, global middle class and not-in-my-backyard energy policies means that energy supplies are falling behind energy demand.
This is bad news for states that depend on tourism dollars, like Florida and California. More expensive fill-ups at the gas station and higher air travel costs mean families have less money to spend once they arrive at their vacation destination, if they go at all. Nearly 40 percent of respondents to a survey from the fuel-tracking app GasBuddy said that high gas prices are already impacting their summer travel plans. With prices threatening to exceed $4 per gallon in some areas, today’s high gas prices would cause the Griswolds to think twice about packing up the Family Truckster and driving from Chicago to California.
Even in the best of times, Americans who can least afford higher gas prices are the most acutely impacted. Americans, on average, are now spending 2.8 percent of their disposable income on gasoline. That’s up 2.3 percent from last year and rising. This increase is even more significant for the working poor, who spend a higher portion of their income on commuting than most Americans.
How do we address rising energy prices and make sure American families can keep their summer plans for years to come? The answer is simple: The U.S. must promote policies that encourage energy companies to once again invest in the exploration, discovery, and production of energy sources. These investments should be encouraged today, not six months from now or later, when gasoline prices may exceed $4 per gallon.
Our energy producers are world leaders in technological innovation and efficiency, but they lack access to new resources, especially those offshore. Currently 94 percent of the U.S. outer continental shelf is closed to oil and gas exploration and production. The U.S. needs a path forward to open up new offshore areas, such as the eastern Gulf of Mexico, the Atlantic, and areas of the Pacific and Alaska. Simply put, if new areas are not available in the U.S., producers will look elsewhere. Do U.S. consumers really want to import oil when it is readily available here? After all, leaving ourselves at the mercy of OPEC has contributed to our current fuel price problems.
To level out the roller-coaster ride at the pumps, and allow families to make the most of their summer vacations, the energy industry needs access to geographically diverse offshore areas for the production of stable, reliable and affordable all-of-the-above energy for America.
Randall Luthi is the president of the National Ocean Industries Association, an energy trade group in Washington, D.C.
