Gas Bags

Technocracy is running on fumes.


In 1994 and '95, paper prices skyrocketed. The cost of magazine paper rose by about 10 percent a month, hardly the sort of hike you can simply pass on to subscribers. Most publishers, including REASON, dealt with the increase by printing fewer pages and adding fewer new subscribers than they'd planned. Newspapers were even harder hit: Escalating newsprint prices drove many to lay off hundreds of employees, raise prices, and, in some cases, go out of business. It was not a happy time in the publishing industry.

Yet as far as I know, no one in the Clinton administration ever called a press conference to address the "paper crisis." Congress never held hearings on the subject. CNN never led the evening news with tales of how paper buyers were struggling. Newt Gingrich never posed for photos in front of giant rolls of newsprint. Bob Dole never denounced the president for his lack of "leadership" on the matter.

And that's as it should be. There was no crisis, nothing requiring an emergency response from government. By historical standards, paper wasn't even that expensive; its price was just higher than expected, and rising rapidly. Government policy had exacerbated things–in this case, through recycling mandates that led paper companies to invest in converting, rather than expanding, capacity–but the main cause of the price jump was plain old ordinary tight supply hit by expanding demand. The higher prices gave both consumers and producers important information about the state of the market. In response, buyers bought less. Sellers started to produce more. And prices eventually crept down.

That's how prices work. They convey information. They give people feedback about what's happening in the world. They produce responses. They go up and down. And while sellers may experiment with different levels, always seeking the most profitable ones, no one in particular gets to decide where prices will end up. They are out of control.

Recently, we've had a "gas crisis." From February through the end of April, retail gasoline prices jumped about 12 percent nationally, 21 percent in California. What's interesting about the latest "gas crisis" is how, despite a brief flurry of media attention and political pontificating, it looks a lot more like the "paper crisis" than like the real gas crises of the 1970s. There are no long lines at the pump or threats of "odd-even" rationing based on your license plate number. You can fill your tank on Sunday, and every station has gas–for a price. The government interventions that distorted energy markets in the 1970s, and put drivers through hell, have disappeared.

This crisis isn't a crisis. It's just a price increase, the sort of signal consumers adjust to every day. No hysteria is called for.

Despite the hype, even reporters (at least in the print media) didn't take long to catch on. The Wall Street Journal put together useful charts and graphs, showing nominal and real gas prices, the latter at their lowest level in my lifetime. The Los Angeles Times compared "unspectacular" oil-company returns on investment to those of other industries.

"Gas-crisis hysteria may just be a case of sniffing fumes" was the headline on a Mike Royko column in the Chicago Tribune. The author explained that he is paying less for gas today than when he started newspaper work in 1956. "When the nation's broadcast babblers, from whom the majority of Americans get their news, say we have a crisis, it's time for the political speech writers to crank out something," wrote Royko, "even if it is something stupid."

Indeed. But I wouldn't put all the blame on the broadcasters. When the price of an important product jumps suddenly, reporting the increase–and the reasons for it–is a legitimate story. What is not legitimate is the implication that the price increase must be someone's fault, and that Washington should be doing something about it. But our opportunistic would-be leaders are quick to encourage the illegitimate story. They cannot bear the idea that something important could happen over which they have no control. They want in on the action. And as surely as the Freemen in Montana, they go looking for conspiracies.

So Newt Gingrich orates in front of an Anaheim Shell sign advertising self-serve regular at $1.539 a gallon. Bob Dole suddenly decides to hold hearings on the evils of the 1993 gas-tax increase and, ever-eager to deal, talks of trading a (permanent) hike in the minimum wage for a (temporary) cut in the gas tax. Bill Clinton says he's selling oil from the Strategic Petroleum Reserve to help drivers–when he would have done so anyway as part of a deal with Congress to fund his education programs–and orders an antitrust investigation of the rising prices.

"There is a frustration here that is unique to inside the Beltway. Washington cannot accept the fact that it cannot control markets," Washington energy lawyer William Demarest told the Los Angeles Times. "There has always got to be a conspiracy. There must be bad actors." Demarest was a senior aide to Rep. John Dingell (D-Mich.), who led numerous investigations of the oil industry in the '70s. He takes a dim view of conspiracy theories: "This is like looking for a needle in a haystack. The amount of money spent investigating the oil industry during the energy crisis of the 1970s was staggering. And to no avail."

What's interesting about the political response to the latest alleged crisis is how tired and calculated it was. Reporters who spent half an hour interviewing informed sources quickly discovered a host of reasons that higher prices weren't surprising, from just-in-time inventories to a cold winter to the increased popularity of gas-guzzling sport-utility vehicles. It also became clear that prices will eventually drop. Nobody believed that Clinton's oil sales would do anything but get him a blip of good publicity. The same was true for Dole's sudden anti-tax zeal. It was a story-of-the-week.

And that's good news.

Twenty years ago, energy crises set off calls for rationing, price controls, auto-mileage regulations, and every other central-planning mechanism ever invented. Today, even technocrats feel compelled to act like they believe in markets: Bill Clinton pretends to increase oil supplies and the Republicans talk tax cuts. That politicians say anything at all about something as apolitical as fluctuating prices may be aggravating, a sign that we still have far to go before "the era of big government is over." But something important has definitely changed. The technocratic promise of what historian John Jordan calls "kinetic change made stable" has been overthrown, its contradictions and perversities revealed.

Time and again, the Clinton administration has gotten itself in trouble by pushing technocracy: with its "economic stimulus" package, with the BTU tax, with ClintonCare. The more a policy requires faith in central planning, in bureaus and administrators and commissions, the more credible the attacks against it. Oil companies are as unpopular as ever, but that doesn't mean the public wants Washington to "do something" about gas prices, or believes the "something" would work.

"Good-government" types frequently rail against public cynicism and the skeptical reporting that feeds it. They pretend to support greater "objectivity" when in fact what they really miss is the drumbeat of technocratic ideology. They long for the good old days when Americans believed that well-intended technocrats could solve any problem, achieve any goal, fix any price–and when reporters reinforced that belief. Those days are finally over.