New government data suggests that spiking gas prices are making everything else more expensive — data that could help the president on Friday as he continues to make the case for expanded investment in alternative fuel sources.
The Bureau of Labor Statistics Consumer Price Index update, released Friday morning, indicates that prices went up an average of 0.7 percent in February. The spike is the highest in months.
And the cause is clear. The BLS indicates that gas prices, up 9.1 percent accounts for "almost three-fourths of the seasonally adjusted all items increase." Or, to put it more explicitly:
The shape of that highly volatile gasoline line (and the energy line, since gasoline is included in those prices) mirrors the shape of the overall price index very closely. Which makes sense: higher gas prices mean higher shipping costs and higher delivery costs, among other things. Prices rose about 50 cents a gallon nationally between the end of January and the beginning of March.
During his State of the Union address, President Obama outlined a plan to "shift our cars and trucks off oil for good." Let's take the advice of business and military leaders, he said, "and free our families and businesses from the painful spikes in gas prices we've put up with for far too long."
Later today, the president will outline his strategy for doing that. In a speech at Illinois's Argonne National Laboratory, Obama is expected to outline an "energy security trust fund," which, according to Scientific American, would allocate revenue from offshore drilling leases to fund research into, among other things, "boost automobile efficiency, enhance battery technology and expand the use of biofuels." Argonne was likely selected as the site of the announcement because of the facility's work on next-generation battery systems.
The White House has encouraged similar research before. As Reuters notes:
Between 2009 and 2011, the U.S. Department of Energy extended nearly $9 billion in loans to automakers to support cleaner vehicle technologies. Those included a $5.9 billion loan to Ford Motor Company to upgrade facilities and raise the fuel efficiency of its cars.
The new program's aim would be "shifting our cars and trucks off oil," a White House document said, while also saying that the United States would continue to rely on "responsibly produced oil and natural gas."
There's one key problem for the president's plan: It requires Congressional approval. The New York Times outlines the politics:
The idea enjoys some bipartisan and business support, but is likely to encounter strong resistance from Congressional Republicans, who will portray it as a tax on energy producers. The White House says the money will come from growth in drilling revenue from leases on public lands and waters over the next decade and is not a new tax.
Should Congress approve the effort, there's some irony involved. Expanded offshore drilling (and, therefore, expanded domestic production) won't help lower gasoline prices. But the revenue generated from doing so could, over the long run, help soften the blow to consumers from the prices we pay by reducing the need to use gasoline at all.