Falling Oil Prices: Useful Lessons from the Slump at the Pump

by Ben Lieberman


Last summer's record-breaking oil and gasoline prices—exceeding $140 per barrel and $4 per gallon—received plenty of attention in Washington and sparked a host of proposed responses from Congress. However, the real lessons are to be learned by studying the dramatic drop in prices since then. These lessons, if incorporated into the nation's energy policy, could help prevent prices from going back up to record levels in the future.

Lesson 1: Blaming Big Oil, Wall Street Speculators, or Other Scapegoats Is a Waste of Time

Anger at high prices last sumer led to the usual push for politically convenient scapegoats. The public was told that major oil companies and Wall Street speculators were responsible by manipulating prices to their benefit, and in response Congress proposed all manner of punitive taxes and regulatory crackdowns. However, the current drop in prices should throw at least some cold water on these claims.

Such allegations are made every time energy prices go up. They..... [more]