It all comes back to Lee Raymond's dewlap. When the history of the 2006 oil panic is written, we will realize it was the retired Exxon CEO's bulbous bullfrog wattle, dangling grotesquely in photo after photo, that leavened public distaste for oil company executives, cemented the idea that some shadowy cabal is responsible for $3-a-gallon gasoline, and paved the way for the various bad improvements the government has in mind now.
The solutions to the gas problem that are currently on the table recall the compromise position on the Heimlich Maneuver the American Red Cross maintained for many years. After decades of advocating backslaps (which tend to push lodged objects down the esophagus) as a treatment for choking victims, the Red Cross finally adopted Henry Heimlich's technique (which is designed to drive objects up and out of the throat), but advocated it in combination with the old backslapping technique, thus advocating two methods working at cross purposes—undoubtedly amusing for bystanders, but doubly lethal for the victim.
In the same vein, America is currently enjoying a full array of mutually exclusive proposals to solve the gas crisis, and with any luck we may get them all. A hike in the gas tax, in combination with a three-month holiday from the gas tax, should set things straight in a jiffy. President Bush's decision to relax clean air standards for the duration of the crisis may help—so long as state governments continue to raise their ethanol requirements. Gas rationing (still a lovely mirage in the distance, but as Adam said to Eve, we don't know how big this thing's gonna get) should help us reduce our fuel consumption—and we'll need all the help we can get, what with the $100 gas rebate checks that every American will soon be receiving from the government.
But the best of the double whammies are aimed at those oil company execs who, don't you know, are driven by greed. The way to get tough with big oil is through a combination of windfall-profit taxes and tax breaks. These things can be done in conjunction with an investigation of Big Oil's profit-seeking behavior. In fact, we should do them before the investigation, just to show we mean business.
But the real weapon against the oil profiteers is to use all the government's power to ensure that Americans keep buying as much of their product as possible. They won't know what hit 'em! Some of the ideas laid out above will help to that end, but Bush's decision to stop filling the strategic oil reserve will be the masterstroke.
But since no policy is complete unless it negates itself, that price relief must be coupled with a foreign policy that should make every American entitled to an "Our Troops Invaded the Second Most Oil Rich Country in the World, and All We Got Was This Stupid T-Shirt" t-shirt. "Some people believe we're subsidizing cheap oil with our military presence in the Middle East," says Robert L. Bradley, Jr., president of the Institute for Energy Research, "but the truth may be that we've contributed to the price increase."
For all the whirring of political machinery at home, $75-a-barrel oil will not be wished away by manipulating additives or guaranteeing free ponies to voters. (As of this mid-morning writing, oil has been dropping for two days, and now sells for $71.05 per barrel). As Bradley notes, the United States is facing down Iran, Russia's oil industry has been consistently underperforming, and Iraq is a basket case in the oil export market. Some of these situations are related to American policy, but most of them share an important factor: state control of oil production, a more critical factor than gas-guzzling Americans or the hobgoblin of Chinese demand. "Nature's cupboard has not gone bare," Bradley says. "This is a classic lack of capitalist institutions. It's the role of entrepreneurship to anticipate demand, and that's what you're not seeing. The problem is on the supply side, not the demand side."
The solution there is to let the price continue to rise, which would either encourage more greedy, jowly fatcats to get into the production game or encourage consumers to reduce their oil consumption. Instead, Bush, having diagnosed America's oil addiction, proposes a weird solution: trying to get the addicts a better price for the drug. The oil spike of 2006 is a Seinfeld news cycle, a story about nothing.
But the cures being offered may get us some real tragedy. "These prices are a signal that the market is working, not that it's failing," says Donald J. Boudreaux, professor of economics at George Mason University. "I can remember the seventies, when there was actual gas rationing—on a first come, first serve basis, on odd/even days. Believe me, it's much better to pay an extra dollar a gallon rather than endure any of those things."