Tuesday, March 18, 2003

Why "Stabilizing" Oil Supplies is Shortsighted

Being an oilman from and oil family in an oil state and with big contributions from big oil, I have no doubt that Mr. Bush sees the world through amber colored lenses.

We all know that the oil embargoes of the 70s had an immediate effect of stifling the US economy. Even worse, the oil embargo hit during the all important years when the baby boomers were coming out of college and "finding themselves."

Since the embargo, the major goal of US foreign policy had simply been to stabilize the price of oil.

Saddam Hussein might be killing a few thousand Iraqis here and there...that didn't matter...so long as the price of oil was stable.

Every increase in the price of gas in the US causes a flood of complaints from consumers. Politicians are all but guaranteed to lose their seat in office if they fail to respond aggressively to any increase in oil. Stabilizing the price of oil is always the first and foremost concern of Congress.

However, demand for oil is insatiable. The US is consuming 20 million barrels of oil a day. Over half of that consumption is from imports!!! The problem with "stabilizing" oil is that consumption will grow expecting stable prices. People will buy SUVs and bigger houses with higher heating bills. The growth will continue until it hits the next level of instability.

It would be far better for people to understand that gas is inherently instable. As such, people and businesses would formulate strategies to cope with that instability. Smart people would find ways to be less dependent on oil.

Massive government effort and wars to stabilize the price of oil lead to complacency and worse problems down the road.

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