As oil prices fall, a lesson should be learned (lower demand=lower prices)

Articles — By forcechange on October 6, 2008 5:00 am

As the global economy slows, oil prices continue to fall.  Much can be learned from this fact.  Mainly, that the “drill baby drill” demagogy we have seen our leadership digress into lately, is completely misguided.  The most important weapon against high oil prices is our ability to lower demand.  Unfortunately, demand is currently being lowered due to our financial crisis, rather than a shift in our energy policy.  Nonetheless, one lesson that should be learned is that once we get our economy back on track and oil prices begin to trend back up, the solution is to decrease demand through a comprehensive shift in energy policy, rather than a politically motivated drop in the bucket from increased drilling.

Additionally, another lesson to be learned is that decreasing oil prices weakens petro-states.  Over the past few years, countries that have large oil resources have enjoyed incredible revenues.  This has allowed some of these countries to flex their muscles in negative ways.  With the lowering of global oil prices, some of these windfall revenues are drying up.  The key will be for us to repeat this situation in the future, but as a result of a changed energy policy, rather than an economic slowdown.

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