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Gas prices at the local pump have exceeded $3.00/gallon for the first time in my life.  Though a lot of this is inflation, we're actually approaching 1981 gas prices in real terms at this point.  There are the usual calls for investigation of "price gouging," "windfall profits," etc., as well as for cutting gas taxes.

This is all irrelevant.  The problem is one of simple supply and demand.  The supply of oil has not increased much, because OPEC controls most of the cheap (relatively speaking) oil, and oil prices are still too low to warrant the use of the world's largest oil reserve, Canada's tar sands.  (Canada contains more oil than the Middle East, but it's not profitable to extract it unless you know oil prices are going to reach levels like today's, and -- here's the kicker -- stay there.)  Demand, on the other hand, has skyrocketed outside the United States.  Fifteen years ago, China's streets were choked with bicycles -- now they're choked with cars, and China is really big.

People don't realize how much China is growing.  Take a look at this.   How much construction does it take for a country to need that much cement?  Think about that -- ten times the construction as is going on in the United States.  A lot of that cement goes to laying roads for cars, too.

There's no "price gouging" -- prices are high because supply and demand makes this current high price the profit-maximizing point.  And if we tax "windfall profits" when things go well for the oil companies, are we going to give them "downturn subsidies" and hand them billions of dollars when things go badly for them?  Why punish them when profits are "too high" but not pay them when profits are "too low"?  It's the profit from the upswings that enables companies to endure the downswings.  Business isn't always a smooth line going up and to the right.

Supply will go up on its own eventually, but it won't help prices -- because it's the high prices, per se, that cause the supply to go up.  Higher energy prices are here to stay.  Environmentalists should be cheering -- this is the one thing that can actually get people to conserve energy.  Of course, most of them aren't cheering, because they have to put gas in their cars, too.

There are two ways to lower how much gasoline you need.  (Note that doing so does not necessarily reduce demand for oil -- after all, oil is needed for other things, like making plastic, and different uses require different compounds from the oil.  In other words, we might need just as much oil to make the plastic we use even if we just threw away all the compounds that make gasoline.  But I'm not talking about "energy dependence" and money flowing to the Middle East -- I'm talking about the expense we as individuals incur to pay for gas.)  One is to use alternative fuels, and the other is to require less energy.

Alternative fuels sound like a great idea, but they're just not ready.  And by "not ready," I mean "still more expensive than gasoline."  As the price of gasoline increases, of course, "alternative" fuels will become mainstream.  But until then...

Ethanol: it comes from corn, so it's "renewable."  But... it burns cooler, so you get only about half as many miles per gallon.  This means that you need to refill the tank twice as often.  And while $2.41/gal ethanol is cheaper than $3.00/gal gasoline, it's not when you need twice as much of it.  Also, it's corrosive, so you need a new car that's designed so that the ethanol doesn't eat the fuel lines.

Methanol: it comes from natural gas, which is also a limited resource.  And it takes a lot of it -- the fuel economy is even worse than ethanol's.  $2.89/gal looks decent until you notice you're getting 14 MPG in a subcompact.  And it's just as corrosive as ethanol.  Also, though it burns quite cleanly, the process of producing it releases carbon dioxide, so environmentalists only like methanol if we can somehow conjure it ex nihilo instead of actually producing it.

Compressed Natural Gas (CNG): this is actually a reasonably viable fuel.  You get decent fuel economy, and it only costs about $1.20 for an amount with equivalent energy to gasoline.  The problems here are relatively simple: you need a car designed for it (that has a huge fuel tank that can contain 50 gallons of 3,600 PSI vapor) and an infrastructure where you can refuel.  Currently these are lacking (though Honda does make a mass-produced CNG Civic, and there are a few CNG refueling station.)  The problem is that natural gas is just as limited as oil (in principle; we have more of it right now) and is also in demand for other purposes.  If everyone used CNG as fuel, it might well stop being so cheap.  Also, the government would probably slap a big tax on it like they do on gasoline and double the price.

Biodiesel: burning vegetable oil in a diesel engine.  You can get cars that do this today (mainly from Volkswagen), and they get 45 MPG.  The fuel's not cheap ($3.40/gal), but if gas prices go up much more, it'll start being cheap by comparison.  Also, the fuel is primarily a waste product from other processes, so there's not much demand for it.  Problems?  Well, at freezing temperatures it has the consistency of wax -- and thus is only suitable for warm climates unless you want to leave your car plugged into an electric heating system all the time when it's not running. Still, like CNG, this at least is a viable fuel, even if it's not for everyone.

Electric: this looks great on paper.  Electric cars have good acceleration, and can go 200 miles on the amount of energy in a gallon of gasoline.  Coal-fired electricity is so cheap you could drive from New York to Los Angeles on $60 of it.  What's the catch?  Umm... you have to stop and recharge for at least an hour every 80 miles.  Ouch.  Batteries are extremely heavy, so putting in bigger batteries doesn't help much (what you gain in available power you lose in weight, so the range still doesn't go over 100 miles total -- or 50 miles round-trip.)

Hydrogen: It has promise.  Hydrogen fuel cells are like superior batteries; they produce no emissions.  And hydrogen can be produced from seawater.  It takes about $11 worth of coal-fired electricity to make enough hydrogen to have the energy of a gallon of gasoline, but you can go 41 miles on that.  This really is a case of technological immaturity -- the theoretical capacity is much greater.  Of course, you still have to figure out how to store tens of thousands of cubic feet of hydrogen in your car.  Someday this may actually be useful (unlike ethanol and methanol, which will never be), but that day is a long way off.

So alternative fuels are, for now, out.  What's the other option?  Reduce demand for gasoline by driving less.  The environmentalists tell us, "Fight urban sprawl!  Live in the city where you can walk to work!  Ride a bike!  Carpool!  Use public transportation!"  And we, consistently, respond with, "No, I don't want to."

When it comes to getting to work, driving individually seems to be the national preference.  Despite the expense, people still prefer it over these alternatives.  We don't want to live in the city, we want to live in the suburbs.  If we're going to be in a car for an hour, we want to be there by ourselves, not with some yahoo from work.  And if we wanted to walk or ride a bike, America wouldn't have the health problems it does.

The problem here is that we're thinking in overly limited parameters.  The way to reduce the energy cost of the commute is not to provide new, less-pleasant ways to commute -- it's to reduce the need for commuting.  Corporate America's attachment to the centralized, monolithic office, where people can be watched, produces this need.  Support for alternative working arrangements could be championed as a way to reduce the need for energy.  If everyone (obviously an unreasonable goal) telecommuted only one day a week, we'd reduce gasoline requirements by 15%.  While we won't reach that in the near term (so far progress seems slow, and more importantly, a substantial number -- probably a substantial majority, actually -- of jobs are unsuitable for remote work), even a few percentage points could make a big difference in U.S. demand for gasoline.

It's one thing to try to get people to change their habits to something less appealing (e.g. riding a train or a bicycle) in order to serve some greater good.  It's quite another to encourage people to do what they wanted to do anyway.  People are much more receptive in such a case.

How much good would this do, from an environmental, world-peace, global warming perspective?  Oh, not much, probably.  But who cares?  If I can enlist the awesome lobbying and cheerleading power of the environmentalist, world-peace, hippie folks to achieve my objectives, it sounds good to me.  They're much better than I at getting corporations and politicians to kneel to their will.