In their lead editorial today, the New York Times castigates both the President and his challenger, Senator Kerry, for arguing about short-term fuel prices and ways to address them, rather than promoting a national debate on the underlying issues of energy use and how it might affect our national security. The Times would have done well to quit after making this excellent point, rather than weighing in for specific solutions, themselves.
Their preferred answer appears to be to tighten the Corporate Average Fuel Economy (CAFE) standards that were imposed in the 1970s, and about which I've written in the past (see my posting of 2/20/04.) A major drawback of CAFE is that it ignores consumer preferences, imposing instead a limitation on the average fuel economy of each manufacturer. Ignoring the loophole that has allowed ever larger SUVs to bypass the intent of the CAFE standards, it is not at all clear that large numbers of consumers will opt for smaller, thriftier vehicles, or willingly pay the higher prices necessary to pay for technology that could reduce fuel consumption.
The Times also chooses to ignore the vital role the market played in mitigating the supply crises of the 1970s, and the way in which the sources of this country's imported oil have diversified in that period, even as demand grew and domestic production declined. We are less reliant on OPEC today than we were in 1975, according to the government's own statistics on imports. The recent growth of production in Russia and the Caspian Sea region offers opportunities to maintain a diversified supply for at least the next decade or so, even though the preponderance of reserves in the Middle East must eventually shift that balance.
While markets have their limitations, and though their results are not always popular--as with current gasoline prices--they do some things much better than command-and-control approaches can. Surely this, too, must be part of the debate the Times presumably endorses.