Opinion: If you thought the Dubai port deal marked a record high in Washington cynicism, think again. Nothing can match the spectacle of politicians scrambling for cover during a spike in oil prices. And this time, the panderfest has gone all the way to the Oval Office.
President Bush has joined the braying congressional hordes by ordering the energy and justice departments and the Federal Trade Commission (FTC) to launch an investigation into possible petrol price-fixing.
Precisely 10 years ago (April 29th, 1996), as gas prices reached a shocking $1.27 (€1) a gallon, President Clinton ordered his energy and justice departments to launch investigations to find out why. In my column that week, I offered a wild guess: "Supply is down and demand is up." I offered energy secretary Hazel O'Leary and attorney general Janet Reno a $100 bet their million-dollar probes would do nothing more than confirm this.
Sure enough, months later these perfectly pointless investigations discounted charges of price-gouging and attributed the price hike to . . . increased demand and decreased supply.
Today, every time an Iranian mullah opens his mouth about nukes, the risk premium for Persian Gulf supply interruptions jumps again. Crude oil prices alone account for about $1.70 of what you pay for a gallon at the pump. So 10 years later, I'll wager again. Here's what the Bush search for price-gougers and profiteers will find: (1) Demand is up. China has come from nowhere to pass Japan as the number two oil consumer in the world. China and India - between them home to eight times the US population - are industrialising and gobbling up huge amounts of energy.
American demand is up because we've lived in a fool's paradise since the mid-1980s. Until then, beginning with the oil shocks in 1973, Americans had changed appliances and cars and habits and achieved astonishing energy conservation. Energy use per dollar of GDP was cut by 30 per cent in little over a decade. Oil prices collapsed to about $10 a barrel.
Then amnesia set in, miles per gallon (mph) ratings disappeared from TV ads and we became "a country of a million Walter Mittys driving 75mph in their gas-guzzling Bushwhack-Safari sport-utility roadsters . . . a country whose crude oil production has dropped 32 per cent in the last 25 years". I wrote that during the 1996 witch hunt for price-gougers. Nothing has changed. Except that since then, US crude oil production has dropped an additional 12.3 per cent.
Which brings us to: (2) Supply is down. Start with supply disruptions in Nigeria, decreased production in Iraq and the continuing loss of 5 per cent of our national refining capacity because of Hurricane Katrina and Rita damage. Add to that the mischief of idiotic new regulations. Last year's energy bill mandates arbitrary increases in blended ethanol use that so exceed current ethanol production that it is causing petrol shortages - and therefore huge price spikes.
Why don't we import the missing ethanol? Answer: the Iowa caucuses. Iowa grows corn and chooses presidents. So we have a ridiculously high 54 cent ethanol tariff and ethanol shortages.
Other regulations require specific petrol blends for different cities depending on their air quality. Nice idea. But this introduces debilitating rigidities into the petrol supply system. If Los Angeles runs short, you cannot just move supply in from Denver. You get shortages and price spikes.
And don't get me started on the missing supply of might-have-been American crude. Arctic and outer continental shelf oil that the politicians kill year after year would have provided us by now with a secure supply cushion in times of tight markets.
In March 2000, the price of gas hit $1.80. Scandalised congressional Republicans shamelessly pushed for a repeal of Bill Clinton's whopping 4.3 cent petrol tax increase. Now that the president is a Republican, what do you think Senate Democrats are proposing? A 60-day suspension of the federal petrol tax. It would cost $6 billion and counteract the only good thing - the incentive to conserve.
George Shultz once said, "Nothing ever gets settled in this town." But even Shultz, who has seen everything, must marvel at the bottomless cynicism of Washington in the grip of petrol fever.
letters@charleskrauthammer.com (© 2006, The Washington Post Writers Group)