The American Spectator

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Political Hay

(Page 2 of 2)

This year has seen frigid winter temperatures, growing Chinese oil purchases to fill its strategic petroleum reserve, increased instability in Nigeria, continuing uncertainty regarding Iran, and selected refinery problems. On the other hand, Saudi Arabia apparently has used its position as the world's reserve producer to moderate prices (it fears a fall in Western demand as well as greater effort to develop alternative fuels).

The best response to such a complicated market is fewer government controls. After all, it was deregulation in 1981 that encouraged new competition and attracted new supplies, putting powerful downward pressure on prices. The best policy today would be to expand production opportunities -- it makes no sense to rail against petroleum imports while placing American lands and coastal waters off-limits to exploration.

Inefficient regulations, such as rules that effectively balkanize the gasoline market, should be adjusted. Barriers to refinery production should be lowered. Subsidies for various fuels, whether proven or potential, should be ended. Most important, Uncle Sam should leave energy prices alone.

It's too bad, really, that the oil companies don't control energy prices. If they did, the world would be a much simpler place. Instead, we must live with markets --imperfect, but still better left free than controlled by government dictates.

topics:
Taxes, Business, Iraq, Iran, Africa, Energy, Oil