Thursday, August 18

OPEC CONTROL + RAVENOUS OIL CONSUMPTION = ECONOMIC APOCALYPSE

Here's one of the more sobering columns (as published in "NRO") I have ever read by William F. Buckley Jr., as he points to Raymond Learsy's book: "Over A Barrel -- Breaking the Middle East Oil Cartel."

As WFB writes, Leary's prescriptions for the "oil crisis" are (and not surprisingly):

The rise in oil prices is not a fancy of Ray Learsy, and the unpredictability of that rise manifestly requires self-protection. How?

Again, quoting from the author.

First, we must cut back energy usage by taking steps to control demand (just as OPEC works to control supply).

Second, we must become energy self-reliant.

We should use the Strategic Petroleum Reserve (700 million barrels) to douse incendiary shoots of inflationary fire. Those uses of national oil would be loans, not grants; repayable in kind, when the price of oil had stabilized.

We will need to encourage alternative energy sources while adopting a voucher-based gas-distribution program.

For the duration of the emergency, gas users would have access to magnetic debit cards in which were embedded a national quarterly target of per-consumer gasoline. Drivers whose allotted amount of gas didn’t meet their needs could buy part or all of someone else’s allotment. For the average driver, this distribution plan would not increase gasoline costs. A consumer would pay the same out-of-pocket cash per gallon, and the government wouldn’t get its hands on any more of the taxpayers’ dollars. It is a more efficient way of distributing energy because it employs market incentives to allow heavier gasoline users to get what they need without increasing overall consumption of energy.

It was twenty years ago that the Saudis and the U.S. arrived at a deal. The Saudis would set prices so as to protect the U.S. oil industry. And the U.S. would protect the Saudis’ independence. We regret that, and should make the Saudis regret it also.