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High Gas Prices Could End 32 Years of Milkman Service

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Unread 03.05.12, 12:43 PM
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High Gas Prices Could End 32 Years of Milkman Service

On 03.05.12 11:30 AM posted by Nicolas Loris

You don’t see too many milkmen out delivering bottled milk to peoples’ homes, and because of high gas prices, you might even see fewer.

Rockville Home Milk Delivery has been in operation for over 30 years, catering to the demands of nearly 5,000 homes in Los Angeles and Orange Counties. Delivery service includes not just varieties of milk (soy, organic, chocolate) but also cheeses, eggs, cream, juices, water, cheesecake, baked goods, and even tamales. But high gas prices are forcing delivery cutbacks from twice a week to just once in an effort to save on expenses.

“It breaks my heart. Thirty-two years of driving, delivering milk early in the morning…to build this from nothing, to build this business with our bare hands, my wife and I, to just see it just disappear right in front of our eyes,” a discouraged Jim Pastor said to CBS last week.

Higher gas prices drive up production costs for all goods reliant on transportation, but larger industries are more easily able to pass those costs onto consumers. But as prices rise, it’s difficult for consumers to justify paying a premium when prices jump. Individual distributors, who operate on razor-thin margins, have a much more difficult time adjusting to higher gas prices.

Pastor said, “I have no control over this and it’s a bad feeling.” Because oil is a globally traded commodity, and the single biggest factor driving the gas prices is the price of oil, it’s largely out of everyone’s control. While U.S. demand has fallen due to a weak economy and a warm winter, China and India are buying crude and driving up the price. The Federal Reserve’s easy money policy has weakened the value of the dollar. It now takes more dollars to buy the same amount of oil in the U.S.

Oil production in the United States has increased on private lands, but last year oil production dropped 14 percent on federal lands and waters, including a 17 percent dip in the Gulf of Mexico, according to the government’s Energy Information Administration. We’re going to need more oil today, next year, and seven years from now. To that extent, Congress and the Administration should create policies that open access and increase production in a timely and efficient manner. Specifically, they should:
  • Get moving on permits. As the only country in the world that places a majority of its territorial waters off-limits to oil and gas exploration, the U.S. should at the very least be drilling in the areas where access is permitted. Removing the de facto moratorium on drilling would immediately increase supply, create jobs, and bring in royalty revenue to federal and state governments.
  • Require lease sales when ready. Congress should open areas that are off-limits: the eastern Gulf of Mexico, the Atlantic and Pacific coasts, Alaska’s offshore, the Alaska National Wildlife Refuge, and lands out West. Congress should require the Secretary of the Interior to conduct lease sales if a commercial interest exists to explore and drill. Congress should also provide the funding necessary to lease new onshore and offshore areas to oil and gas companies. Although it would take time for the federal government to lease these areas and for the energy companies to develop them, at least the process could begin.
  • Create a sensible review processes. Environmental activists delay new energy projects by filing endless administrative appeals and lawsuits. Creating a manageable time frame for permitting and for groups or individuals to contest energy plans would keep potentially cost-effective ventures from being tied up for years in litigation while allowing the public and interested parties to voice opposition or support for these projects.
  • Approve the Keystone XL Pipeline. Congress should use its authority to regulate commerce with foreign nations to accept the State Department’s conclusion that construction of the pipeline would pose minimal environmental risk. Approving the pipeline would create jobs and increase energy production—both of which the nation desperately needs—from a friendly supplier and ally.

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