I'm at the gas station, filling up my shoebox-sized Mazda, and like everyone else, I'm bemoaning the price of gas. (The following fact has always amused me: at $3 a gallon, unleaded gasoline works out to be 2.3 cents an ounce, while a $1.50 bottle of water requires consumers to pay 7.5 cents per ounce for the earth's most abundant element.) And like everyone else, I have the impulse to blame someone. But who can we blame for the current spike in petrol prices? According to historian Niall Ferguson, as much as we'd like, it's not that easy to cast blame on this issue:

"Leading Democrats blame President Bush for being too "cozy" with the oil industry. Those who argued that the Bush administration invaded Iraq to make oil cheap now argue that it was in fact, er, to make oil dear."

    An interesting irony, indeed. So if we can't blame world governments and we can't blame the oil industry, how do we explain our situation? Ferguson takes us back to Econ 101: The price is so high because supply has remained relatively the same while demand has sharply increased (by 40% worldwide in the last 20 years). So if it's really just "the economy stupid" (great quote by the way, perhaps I should trademark it…) what is our future?

    There are speculations on all sides of the issue. Some say the high prices will incentivize alternative fuels and alternative transportation. This may simply be us learning a lesson the hard way. In his piece, Ferguson points to ethanol as a prospect. Ethanol is a natural, cost-efficient energy source derived from plants such as sugar cane. Eighty percent of cars in Brazil can run on either ethanol or petrol, Ferguson points out. So what's stopping us from using ethanol? Oddly enough it's not simply the oil lobby (although they do play a role) that is making the transition difficult– it's farm subsidies that are the real problem. Currently, tariffs to protect U.S. and EU agriculture is what is keeping ethanol from becoming a viable alternative. I think the agricultural lobby needs to loosen it grip and let us all try putting a little sugar in our gas tanks.

Daniel Corbett