Don't Turn Your Back On Norway

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CBS
Bewitched, bothered and bewildered by soaring gasoline prices? Don't hold your breath waiting for the straight poop from our public servants. As Eric Engberg points out, not even OPEC knows what it's doing.

Everyone knows that mixing gasoline and fire is a recipe for disaster. Less well understood is how dangerous - and silly - it is to mix gasoline with politics. As retail prices for gas nudge above $2 in parts of the country, some of our public officials are learning what a potent and uncontrollable brew you get when you try to play standard political games with gasoline. Judged by Reality Check standards, none of them has looked particularly good.

There are two fundamental reasons why gasoline and politics are so volatile together:

1. As the authoritative publication Petroleum Economist reported this week, Americans seem to view cheap fuel for their cars as a "constitutional right," even though motorists in the rest of the world have long ago come to terms with prices above $2 a gallon. Politicians, being politicians, pander to this view.

2. There is almost nothing that the U.S. government can do to force lower prices. Fifty-five percent of America's crude oil comes from foreign countries. Most of them are currently friendly to us, but they are nonetheless sovereign states that U.S. leaders have limited ability to influence. If you think - in the vernacular of our adolescents - that this "sucks," then just play the FLIP IT game for a minute; look at things from the other guy's perspective.

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How would the American citizenry react if some oil-producing state, say Qatar, delivered an ultimatum to us on a product we monopoliz? One day the Qatari government sends an emissary to the White House to tell Big Bill, "We don't want to pay $12.95 for Elvis CD's any more. We want them for $4.95. If you don't cut the prices, we'll do something bad to you." You get the picture.

For reasons that could only have been related to a bid for partisan political advantage, Energy Secretary Bill Richardson has been on the talk-show circuit since last winter, assuring everyone that the Clinton administration is moving decisively to bring the prices down, and trying to spread a soothing balm of assurance that has been quite spectacularly wrong at every turn.

In February, gasoline averaged $1.36 a gallon nationwide, 44 cents higher than the year before. Ugh. Buon February 17, on Good Morning America, Richardson said: "We believe ... that prices will stabilize . . . We will not have excessively high prices."

In March, on the CBS Early Show, Richardson predicted a "modest and gradual decline" in prices at the pump.

In April, responding to Richardson's campaign of "energy diplomacy" and to fears that high crude oil prices might kick off a recession in parts of the world, OPEC, the international cartel, decided to increase production to try to stabilize prices. This news was so welcome to consumers that Richardson's number crunchers predicted gasoline prices would average $1.46 a gallon for the summer, high but not politically troublesome.

What's interesting about the OPEC decision, in retrospect, is that the producing countries were just as wrong as Richardson about the impact of their decision to turn on the spigot. The producers want prices to stabilize somewhere below $30 a barrel for crude oil, partly because they don't want to encourage the big oil companies to launch a fresh wave of expensive exploration that would undermine OPEC's ability to control prices. Nor do they want oil to be so costly that consumer nations start pushing development of alternate energy sources.

But even the control freaks at OPEC have trouble lowering prices when demand won't go down. And that is what is happening now. Consumers have money, due to a roaring economy, and they are willing to spend it to be able to take their cars out whenever they want.

There is another OPEC meeting coming up June 21 in Vienna, and Richardson and other American policy makers can only hope that the producers will open up the spigot still more. Otherwise, the issue of who let gas prices soar out of control - with the usual finger pointing - likely will be a centerpiece of the November campaign. For Richardson this would be doubly bad news, because he has legitimate designs on a possible vice presidential selection.

I mentioned earlier that gasoline makes politicians say things they otherwise would think twice about. Here is a classic example. Rep. Donald A. Manzullo , R-Ill., has branded the oil producing cartel "an international criminal conspiracy" and demanded that the administration do something to break it up. Saudi Arabia and Kuwait, he says, should "hang their heads in shame" because if we hadn't defended both of them against Iraq in 1991, they'd be living under tyranny.

What Rep. Manzullo conveniently left out of this tirade - and what few people seem to know - is that Norway, a staunch NATO ally; Mexico, a vital hemispheric security partner; and Venezuela, a producing state that has been very responsive to American wishes in the energy area; are all taking part in the current price manipulation scheme. We rely on democratic, responsible nations like these to advance America's political and diplomatic interests. No one wants to say it out loud, but tere is no way to strong arm them into bringing down oil prices without gumming up our entire position as a world leader.