That isn't good enough. On top of the high cost we are paying, we have the political question. It is humiliating to do nothing when, for instance, the Peacock Throne of the Ayatollah calmly advises that it proposes to reduce oil production by 220,000 barrels per day. That means, after the decree is implemented, that the price of oil would rise about 10 percent.
What we do hear every now and again are proposals for reducing our consumption of oil. Most recently, the formidable Martin Feldstein, the Harvard economist who writes for The Wall Street Journal, proposed a voucher system of considerable ingenuity. Feldstein, remember, is a free-marketeer and is alert to keeping the covetous hands of government, to the extent practical, out of the way. What he proposes is that everyone be given at the start of every year vouchers for X amount of gasoline (with allowances for geographical location and profession), the design being to cut down gasoline consumption by increasing the cost of the incremental post-voucher gallon.
But do not confuse this with wage and price controls, because if you ran out of your vouchers, you could buy somebody else's, buy from the guy or gal who drives less and looks forward to selling unused vouchers. All of the above, by the way, would be automatic at the gas pump, which would sell you the gas and buy and sell vouchers in a simultaneous transaction.
Then, of course, there are the supply-siders, who reasonably urge that obstacles to the development of oil and gas reserves be reduced. It is good rainy-day stuff to dream about the day Bill Gates III discovers how to decoct energy from the sun's rays. But meanwhile we have to live with the consequences of our huge appetite for energy and the caprice of OPEC, an oligopoly we have never seriously figured out how to deal with.
Consider, to name only one OPEC power, Saudi Arabia and its 7 million barrels per day. How might we protect ourselves against Saudi hostility/petulance/greed? It is satisfying to keep repeating to ourselves that Saudi oil is of no use to the Saudis unless they actually sell it. That is reassuring, but doesn't deprive the Saudis, as OPEC operatives, of the right to tease/irritate/threaten/plunder their clients without regard for market adjudications of supply and demand. We know what it is to have to stand in line for gasoline. Sixty years ago the Japanese knew what were the implications of an oil embargo, one of them being Pearl Harbor.
The policy question today is: What is our policy? We need to try to tame demand by such proposals as professor Feldstein's, but we need also deterrent stratagems, which are political. How to align our forces with fellow states in the industrial world in such a way as to protect ourselves? Oil is a vital interest. Japan went to war in part because of its need for oil. We need to develop non-military means of affecting OPEC.
How? Well (to stay with Saudi Arabia), the purpose of selling oil is to generate income. What does one do with income, other than buy jewels and yachts and private jets? The OPEC powers buy industrial goods. We need to devise economic counter-measures aimed at aggressors, here defined as those who collaborate to fix prices. Our policy-makers should be resourceful enough to devise measures of economic retaliation, custom-designed for Venezuela, or Nigeria, or Iran, or Saudi Arabia.
Reasonable and justifiable criteria for the fair price of oil are not easy to come up with (the production of a gallon of oil in different oil fields can vary by a factor of 500 percent), but there is no reason to ignore the challenge. President Bush is understandably preoccupied. But it would be reassuring to know that something is afoot other than abject compliance every time OPEC decides to extort from industrial oil consumers.