With C as my best grade in college economics, authoring an economics editorial might not be justified. If you have viewed TV news or read a newspaper lately, C may not be a poor grade relative to their knowledge of supply and demand economics as it affects oil and gas prices.

Political analysts and politicians have suggested the United States abandon protective assistance of Arab countries and let their production fall in chaos, since we import our oil from Venezuela and Mexico. Did they sleep though the Venezuelan oil worker strike?

I recently received an e-mail suggesting Americans boycott ExxonMobil and Shell by not purchasing gasoline for one day this week, and this action would reduce gasoline prices. My response suggested they sell their 15-mpg SUV and 12-mpg pickup and purchase a fuel-efficient automobile and a bicycle. From their response back to me, I am sure glad they were not issuing grades.

Most European "hire" cars achieve 30+ mpg; even the "luxury" models. Do we reason that US $5-per-gallon gasoline creates conservative attitudes from the car buyers? When purchasing a new automobile, do you look at the fuel efficiency rating on the sticker? I suspect you would if a gallon of gas were $5.
I recall one economics lesson (perhaps I attended class that day) suggesting that if we are not concerned about cholesterol and desire to consume massive quantities of butter, but all the cows in Europe have died (Mad Cow Disease or otherwise), the price of butter will go up, even in the United States where we have milk production.

In an '80s editorial (which I have framed on my office wall), Lee Iacocca, chairman of Chrysler, suggested a $5-per-bbl import tax on oil and $0.12-per-gallon tax on gasoline, incrementally increasing over a few years to reduce the shock of a sudden price increase such as OPEC induced in the '70s. Included in his plan was a commitment to use a defined portion for debt repayment (only $200 billion debt then) and the remainder for social programs. Had we paid attention, the United States would not be in debt, Social Security would be solvent, and we would be less dependent on imported oil.

Lee's plan would artificially increase gas prices, reduce consumption (and dependency on imports) and yield long term price reductions. We reduced per-capita consumption by 20% in the late '70s with conservation efforts thus leading to lower oil prices by the mid '80s (do you remember that era). Low prices again led to increased consumption followed by high prices.

Having spent something in excess of $500 billion protecting and freeing Arab countries over the last 12 years and importing 30 billion bbl of oil, the actual cost of imported oil to the United States is well in excess of $42 per bbl (one recent article suggests $50 per bbl).

A US energy policy must address reduced consumption and increased domestic supplies. It will not be an easy task as OPEC has demonstrated its intent to prevent our achieving such objectives.
Perhaps this editorial is about trying to justify poor grades in economics after all these years. It is evident that I do not understand whatever the United States calls its energy policy and would probably repeat the C, at best.

"Doc" Stokley is vice president of research and development with TAM International Inc.

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