Secretary of Energy Steven Chu and the Obama Administration want the price of gasoline to go even higher.

Looking at history often teaches a lot. However, people are slow to learn the lessons of history as a quick look at fuel prices shows. The recent sharp rise has to do with the increase in its demand over the last few decades, as well as the energy policies that have been put in place.

In the 1950s, gasoline was cheap — very cheap. That’s because in 1950 the US was energy self-sufficient. There was no need to import oil since the United States used as much as it produced. On average, gasoline was about 6¢ per gallon. Just to compare, a M^cDonald’s hamburger cost 15¢ and a movie ticket cost 60¢. In other words, a single gallon of gas cost twice as much as a burger but half as much as a film.

Throughout the 1970s, petrol remained under $1 per gallon; yet, already, the world had begun to change. The Vietnam War and the Watergate scandal contributed to rising uncertainty which fueled the late decade’s inflation crisis. By the time Jimmy Carter was in the Oval Office, an energy crisis gripped the country and petrol was hard to find but this had less to do with the average price — which remained under $1 — and more to do with democrat-controlled 95^th and 96^th Congress’ price fixing schemes. As always happens, when the government tries to circumvent the laws of supply and demand to artificially set a petrol price, the supply evaporates. Simply, no one will continue selling a product after the profit has been removed. It’s too bad the well-respected peanut farmer never studied Economics 101!

The Reagan Revolution changed the economy for the better: Price controls were removed on many items, fuel prices increased — albeit just slightly — and a gallon was still just over one dollar. The difference was that in the 1980s, fuel was available everywhere. There were no long lines and no one had to follow the tanker trucks. There was a big spike in prices when the Iran-Iraq War erupted but gradually the prices returned to normal levels. In fact, all the way until 2005, when adjusted for inflation, fuel prices were relatively constant. Hamburgers and movies, on the other hand, continued to rise. By the close of the decade, it was cheaper to drive a date around town than actually take her for dinner and a movie!

The next two decades saw fluctuating prices as dependency on imported oil grew and world crises gained control on the American market. Then, over the last three years, gasoline prices around the country have more than doubled. This is happening not only in the United States but around the world. People in countries from Israel to China are paying about eight dollars per gallon. Now whilst some predictions have prices falling again, they will never go below where they were in 2005 and beforehand. Gasoline prices even reached over six dollars per gallon in some parts of California in the past few weeks.

The interesting part is that not all of this is due to a lack of global supply. Some of the price spikes are unintended consequences of government taxation and energy policy practices. California’s liberal legislature over the past thirty years has prevented the building of new refineries, barred their vast coastal resources to be tapped and yet mandated a myriad of specially blended fuel requirements. When a fire disrupted production in the state’s only operating depot, the perfect storm resulted in the unprecedented spike. If ever a new, comprehensive energy policy is needed, the time is now.