Submitted by Majed Akhter, Sep 12, 2007 05:41

It is too bad that American congressmen are succumbing to the populist pressure to "do something" about oil prices. Several points need to be made.

First of all, and most importantly, oil is not just another resource. It is one of the most notoriously volataile resources, primarily becuase we don't know when, where, and how much of it can be produced in the forseeable future. Its stability has many factors and ripple effects, becuase of all the vital sectors it feeds into: transportation, power, industrial production, etc. There is a reason wars are not fought over microchips and are over oil.

Second, it is in the favor of America to have stability in the global markets. When Arabian Crude was in a free fall and hit $8/barrel in 1986, it was then VP George Bush who went to Saudi Arabia to try to convince the Saudis to pressure OPEC into raising prices to at least $15-18/barrel. Why? Becuase economic crisis do not always have to do with inflation. One of the exacberating factors of The Great Depression was becuase prices were too low for most commodities.

Third, don't believe the hype about markets solving everything. The first and second welfare theorems of economics, which are the bedrock for most of the exhortations of neoliberals, whether they know it or not, are extremely abstract, apolitical, ageographical, and ahistorical mathematical models. Just because newspaper columnists who have heard some World Bank speeches say that market policies will work doesn't mean they will. Even a superficial reading of the oil and gas industry will reveal that OPEC (and the agency it was based on, the Texas Railroad Comission), arose for a reason. We are dealing with the economcis of a natural resource. Mainstream and most heterodox streams of economics have ignored the peculiarities of natrual resource production, and based their models on industrial production.

Fourth, national soverignty is no joke. Americans might think it is God's will that there be private property over natural wealth--but in fact, America is the only country in the world where subsurface minerals are not owned by the State. Again, there are reasons for this that have to deal with peculiarities of natural resource prodcion.

I would imagine that not all US Congressmen are idiots, and have uncritically swallowed free-market idealogy. I imagine that many of them are well-educated, and at least take a passing interest in economics, history, and politics. Maybe I'm wrong, but I don't think so. My guess is that this legislation is just a populist sideshow, meant to distract American consumers (which is too easy to do) from the pressing issues of fossil fuel depletion, the unsustainable lavishness of their lifestyles, and the humiliating reality that the US will have to start working with other countries of the world. Pinning the blame on a bunch of shady Arabs, ingrate South Americans and evil cartels is much easier then actually facing the problem.

Note: Comments are screened, and in some cases edited, before posting. We reserve the right to reject anything we find objectionable.