Tomorrow, Vice-President Cheney is off to the Middle East. Part of his agenda will likely be a stopover in Saudi Arabia to try and convince the Saudis to increase oil production and provide some easing on world prices. Charmer that he is, I'm sure Cheney will succeed and we'll all be back to the good old days before you know it.
The irony here, and the thing I find interesting, is that this little bit of groveling before the sheiks comes from a member of the party that always talks about the genius of the free market and the sanctity of private property. OK, so both those forces are in play here - hey, it's their oil, beneath their land - why shouldn't they charge, or keep production levels, at whatever the market will bear, or for that matter, whatever the hell they want?
None of the oil-producing countries need a lesson in economics. Their model to maximize profitability can be captured in a simple spreadsheet, and may be one of the purest examples of supply and demand around.
What will Cheney say? "Well, you know, if prices go too high, that'll push the United States into a deep recession, and then prices will go down due to lower demand." I picture the Saudis pausing, maybe suppressing a laugh, and then very calmly replying: "Yes, we understand Mr. Vice President, but we, uh, have other buyers."
What should oil cost? Whatever the market will bear. They have it, we need it. Actually, to reflect the true cost of importing oil to this country, including the need to maintain an outsize military and the human cost of using it in endless wars, the price of gas at the pump should be much, much higher than it is already.
We have done really nothing in more than 30 years to break our foreign-oil addiction. Nothing. So here we sit, more at the mercy of uncaring market forces than ever before.
Good luck, Mr. Vice-President. But you're wasting your time.