Another Perspective

The French Were Right

At least so far as Congress and gasoline is concerned. But Ronald Reagan was more right on matters of supply and demand.

By 5.1.06

The French were right about one thing: plus ca change, plus cela meme chose -- "the more things change, the more they stay the same" -- at least so far as Congress is concerned.

In early 1974 I went to work in Sacramento for then-Governor Reagan as his Director of Public Affairs. Some of my colleagues urged me to help persuade the governor to "stop defending the oil companies." The odds of that happening were about as good as persuading the pope to come out for abortion. The cause of their concern was real, nevertheless. In the wake of the Arab oil boycott and the long gas lines of the previous year, gasoline prices were going up.

Reagan said it was a matter of supply and demand; that the Arabs and their friends were forming OPEC to take advantage of the situation and that the Democrats were demagoging it. He was right. The Democrats, in control of Congress and not yet having run Nixon to ground, were scapegoating the oil companies in order to strengthen their electoral chances. Oil company CEOs were called to account at Congressional hearings. Predictably, they used bluster and complicated answers to simple questions and were made to look like nincompoops. There was much self-righteous harrumphing about this by members of both parties, though Democrats led the charge.

Fast-forward to last week and the members of Congress, back from a comfortable Easter recess, trumpeting again about "windfall profits," "price gouging," "unconscionable earnings" and so forth. This time the Republicans are in control, but desperately anxious to get ahead of the Democrats in their denunciation of the oil companies. Committee chairmen are in full-harrumph.

Senator Specter wants a "windfall profits" tax. Senator Grassley wants to subpoena oil company tax returns, presumably to find such profits. Meanwhile, Senator Schumer, determined not to solve any problems but to make Republicans squirm, has his daily sound bite to raise the decibel level.

The problem is one of supply and demand. Demand is outstripping supply. The Chinese and Indians are soaking up huge amounts of petroleum and want even more. Supplies in Nigeria are dicey because the government won't give people in the oil-producing area anything like a fair share of oil revenues. Iran is problematic -- or wants us to think so. Iraq, bedeviled by insurgents, isn't producing at full capacity. Venezuela continues to threaten nationalization.

We Americans can only do so much about all this. President Bush was right in his State of the Union address when he said we were "addicted to oil." The solution is to gradually wean ourselves away from it, first by promoting plug-in hybrid and flexible-fuel vehicle technology (hydrogen-fueled cars are way in the future). OK, so Bush came to his conclusion late in the game. Better late than never. He can now lend the weight of his voice and office to promoting the short-term solutions. The brisk sale of hybrid autos is testimony to the value of market forces
at work.

As gasoline prices go up, sales of Hummers and other fuel-guzzling behemoths will go down. Most cars today have "instant" and "average" miles-per-gallon calculators on their instruments panels. Once you get used to watching those -- particularly "instant" -- as much as you watch the speedometer, it is surprising how quickly you will moderate your speed to get better gasoline mileage.

And, while we are moving toward other technologies, it's time to get over the inordinate fear of nuclear power, of advanced-technology drilling in ANWR (the caribou don't mind the Alyeska Pipeline from the North Coast, as many photos and videos testify) and offshore California and Florida. It's time to get over NIMBY. We're all in this together. Ronald Reagan would agree.

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About the Author

Peter Hannaford, who died on September 5,  was closely associated with the late President Reagan for a number of years. His most recent book, Washington Merry-Go-Round: The Drew Pearson Diaries, 1960-69, of which he is editor, has just been published.