Last week a study from the National Commission on Energy Policy published a study identifying the ways in which the United States is most vulnerable to an oil shock. Among the key possible causes are thought to be political unrest in Nigeria and terrorist attacks in Saudi Arabia.
In today's tight conditions, taking just four per cent off the global oil market could cause the world price to go to $161 per barrel, the study says.
Reflecting on the challenges, James Surowiecki (on the financial page of The New Yorker, 26 Sep) reports that a greatly increased gasoline tax is the only measure that economists can agree on as certain to tackle the root cause of the problem - massively wasteful overconsumption.
Defining a high tax as progressive may seem counterintuitive, but this is only when you do not take into account the other ways in which [poor] people pay for apparently cheap petrol. (This point was well made to me by some academics on a recent visit to the US).
"in political terms the gas tax's virtues - simplicity, tranparency, immediacy - are vices. Politicians prefer complex systems that allow them to satisfy particular constituencies, reward supporters, and disguise the true cost of things. And, strangely enough, voters implicity prefer indirect taxes to direct ones."
If one or both of these statements is or are true what prospect is there for reform in the US adequate to this most fundamental challenge? Are European nations and emerging powers really in any better position?