Washington Week: Student Voices (O)

Lebanon conflict affects gas prices
By Autumn Waska
Daily Mississippian (U. Mississippi)
07/24/2006

(U-WIRE) OXFORD, Miss. — Increased warfare in the Middle East have contributed to the recent fluctuation of gas prices in the state and country and will continue to affect the state of dependency on foreign oil and additive usage, according to economists at the University of Mississippi.

"If Israel does not put ground troops in Lebanon, we'll continue to see the same prices go up because of the uncertainty about supplies," said William Shughart, an economics professor at the University of Mississippi.

"I think the people that trade crude oil futures are concerned there might be a broader land war in the Middlae East," he said.

He said traders are worried that Iran and Syria will become involved, disrupting crude oil shipments.

The federal government mandate requiring oil refiners to substitute ethanol for the previously used additive MTBE is also a reason that has caused gas prices to rise, Shughart said.

"Ethanol turns out to be more expensive than the previously used additive and this increased the cost of refining oil," he said.

Shughart said ethanol is produced because of subsidies and it is the economy, not the government, that must decide which fuel source is best.

"Just let the market determine what the best mix of additives is for gasoline," Shughart said. "We don't need the heavy hand of the government telling refiners how to best make their products."

George Carter, Department of Economics chair at the University of Southern Mississippi, said the use of ethanol could lead to a growing economy in Mississippi.

"Brazil now mixes ethanol with their gas and does not import any petroleum," Carter said. "Here in Mississippi we extract ethanol from natural products so this could lead to business opportunities for our state."

On the downside, however, Carter said the use of ethanol could lead to an increase in prices for agricultural products, a result that would have a negative affect on people depending on those products.

Shughart said in order to bring prices back down, environmental drilling rules in Alaska, California and the East Coast should be relaxed.

"It surprises me that the environmentalists are not doing handsprings now, celebrating the higher prices," Shughart said. "Most consumers would like to have a little dirtier air and cheaper gas."

Carter said commuters are most affected by the high prices. The gas prices could lead to a shift in the economy. Carter said activities that require gas, such as travel, could be adversely affected by the increasing prices.

"What's happening is that people are taking more trips by car rather than by boat, plane, etc. because of the terrorism threat," Carter said, referring to the travel reaction to the Sept. 11 attacks.

Tourist attractions are also affected by these gas prices.

"People feel more safe in cars, so places you can't get to by car are seeing less tourism," Carter said. "So what's happened is there's been a real shift to domestic vacations taken by car."

Many people are not pleased by the high prices.

"With the rising gas prices, I've been unable to go home recently," said Anne Davis of Greensboro, N.C.

Charles Mullin, manager of Double Quick on Jackson Avenue has seen the public's reaction to the prices firsthand.

"People are constantly complaining about the [gas] prices," Mullin said. "The market just responds to the cost per gallon to the crude coming into the country. Recently the cost of gasoline went up really high so we went back up [on our prices.]"

Campus News Editor Willow Nero contributed research to this article.

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