Re "Surging Gas Prices Pump Up Political Debate," March 31: Isn't it funny how the free-marketeers become market interventionists when the shoe is on the other foot? OPEC's decisions on oil pricing reflect a classically elegant interpretation of market theory: When you have an inventory of something that is in high demand and short (and in this case, diminishing) supply, you don't sell it off as fast as you can at bargain-basement prices, especially when it's the only inventory you have.
No, you charge what the market will bear, and you husband your inventory so it will last as long as possible. I suppose our ultimate answer to OPEC will be, as in Iraq, to break into the store with guns and take what we want. Not very pretty, but it is our traditional way of doing business.
Well, let's see, OPEC has agreed to cut its oil production because it says members have been exceeding current agreed-upon levels in an attempt to take advantage of already historically high prices per barrel. Economists around the world have agreed that this could push the price per barrel to $40 or more. So who suffers? Everyone but the OPEC members and the big oil companies. When this happens we can kiss this dubious economic recovery and the nonexistent job recovery goodbye.
But just wait till Exxon Mobil, Chevron, Shell and the others release their sure-to-be-enormous profits for the first quarter of 2004. Could this be yet another payback to their long-standing protection of the oil empires that helped put George W. Bush and Dick Cheney in the White House? I guess we'll never know, because Cheney won't tell us what went on in his meetings with these companies to set our energy policy.
I wonder if the OPEC members got the minutes of those meetings?
Thirty years ago, OPEC and the Saudis warned us that petroleum would run out. Our response, after increasing fuel efficiency for passenger cars, was twofold: We veered off into denial aboard SUVs, and we learned to drive like lunatics, speeding as fast as possible to every red light. Whatever we get we'll have deserved.