Learning the Hard Way
The oil market is trying to teach policymakers a lesson. While they learn it before it's too late?
12:00 AM, Jun 22, 2004 • By IRWIN M. STELZER
A final lesson for policymakers: Prepare for the day when bin Laden and associates are in a position to topple the Saudi regime and withhold supplies of oil, causing a major economic trauma in industrialized countries and a humanitarian catastrophe in the undeveloped world. That means continuing to build strategic reserves, but much more. Alternative sources of energy for transportation uses cannot be available in the relevant time frame, if ever; places such as Alaska take a long while to develop, and anyhow don't have enough oil to matter; renewables such as solar and wind power are not replacements for gasoline; conservation can be useful when prices rise gradually, giving consumers time to adjust to higher prices, but not when there is a price explosion.
I was asked many years ago at a gathering of government and industry experts to lay out an energy policy for America, to cope with a supply interruption. Two words: "aircraft carriers." That remains true today. Iraq is not a war for oil. The next U.S. intervention in the Middle East may well be.
Irwin M. Stelzer is director of economic policy studies at the Hudson Institute, a columnist for the Sunday Times (London), a contributing editor to The Weekly Standard, and a contributing writer to The Daily Standard.