Oil at $100: Money to burn

In reality, the price of a barrel of oil only climbed a couple of cents. But in briefly touching $100 a barrel last week, said the Los Angeles Times in an editorial, the price of oil hit an important psychological milestone. With oil now joining a growing list of worries for consumers and businesses, “2008 could be a challenging year for the economy.” Growth is slowing dramatically, Wall Street has the jitters, and the country is on the brink of a recession. With the price of oil tied to the price of everything else, the latest increase could easily tip us over. It’s one more reason that “we must reduce our dependence on this limited resource.”

This is a political problem as well as an economic one, said Neil King in The Wall Street Journal. As long as we’re utterly dependent on foreign oil, the U.S. and the West will continue transferring hundreds of billions of dollars to unfriendly, autocratic regimes in the Middle East, Russia, and Venezuela, all of which are arrogantly challenging U.S. influence in their parts of the globe. Why, then, do we have such a “stupid energy policy”? asked Investor’s Business Daily. There are 20 billion barrels of oil sitting beneath the frozen tundra of Alaska that we’re unwilling to drill, for fear of bespoiling a remote area’s natural beauty. Instead, we call for the use of “alternative fuels,” corn-derived ethanol in particular, overlooking the inconvenient truth that it takes more energy to produce a gallon of ethanol than a gallon of ethanol contains. Our real energy problem is not our “dependence on foreign oil” but our foolish “independence from domestic oil.”

There you have it—the price of oil serving as a “Rorschach test,” said Daniel Gross in Slate.com. The symbolism of $100 a barrel has pundits trotting out their pet theories and peeves about U.S. energy policy. The truth is that oil prices have been driven upward by soaring demand, especially from China. In the long run, said Paul Krugman in The New York Times, China may have a bigger impact on our way of life than Iraq or anything happening in the Mideast. Its monstrous appetite for energy will continue to drive up prices, and to help heat up the planet, unless we can convince the Chinese to take a more responsible course. Yet none of our presidential candidates ever mentions this, or is asked about China at debates. When it comes to foreign policy, “we’re having the wrong discussion.”

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