Fueling the economy

Wednesday, Feb. 2, 2011 | 2:01 a.m.

The prices at the gas pump have been painful recently. Americans are paying an average of $3.10 for a gallon of regular gasoline, an increase of 44 cents over this time last year, according to the Energy Department.

With the situation in the Middle East, there are predictions that gas prices will go even higher. But analysts say they don’t expect a repeat of 2008, when the average price of a gallon of regular gasoline broke $4, because of different market conditions. We hope they are correct.

The rising cost of gasoline is threatening to hurt the American economy’s recovery. The prices are eroding the budgets of businesses and families, who may be traveling and spending less because of the cost increase. That takes more money out of the economy. As Nevadans know all too well, the nation has seen travel and tourism suffer due to the sour economy.

Yet when gas prices skyrocket, oil industry executives typically shrug. Market forces, they might say, pointing to the cost of crude oil. They also might point to the cost of refining or issues with government regulation or anything else to avoid dealing with the matter. Meanwhile, oil companies continue to reap large profits.

Market forces, indeed.

What makes it worse is that the U.S. provides billions of dollars in subsidies to the oil industry every year. In his State of the Union address, President Barack Obama called for an end to oil subsidies, and instead, an investment in renewable energy. This week the White House said it would ask Congress to remove $4 billion a year in oil subsidies in the president’s budget proposal, enraging the oil industry.

Jack Gerard, president of the American Petroleum Institute, the industry’s lobbying group, decried the proposal, telling The New York Times that the president got it wrong.

“The federal government by no stretch of the imagination subsidizes the oil industry,” he said. “The oil industry subsidizes the federal government at a rate of $95 million a day.”

Well, if the federal government doesn’t subsidize the oil industry, then why should there be a problem with the president’s proposal? Let it be so.

Still, Gerard alleges that removing the subsidies would cost American jobs, as if the oil industry would stop drilling for oil here.

Please.

The oil industry isn’t going anywhere, and it isn’t unduly burdened. It pays taxes and it also pays royalties and fees — in return for the lucrative rights to pump oil from federal land. The oil industry is healthy — and wealthy — and it will be without subsidies. The country and the world need oil and will for years to come.

Subsidies should be for emerging industries that need the help, particularly renewable energy. The nation hasn’t done enough to spur that industry forward.

America needs new energy sources to ease the country’s dependence on foreign oil. Renewable energy will be a boost to the economy, particularly as it could help stabilize energy prices. But it will take subsidies to really get the industry going.

In Nevada, this is a vital issue. The state has ample sources of renewable energy, including solar, wind and geothermal, and it should be the focus of the nation’s renewable energy push. A booming renewable energy industry would help Nevada’s economy, bringing good, high-paying jobs.

That would be good news for everyone.