The world’s petro-states must be so torn right now. On the one hand, the slowing global economy is decreasing the demand for oil, thereby causing its price to drop. This, in turn, is taking a big chunk of revenue out of those country’s coffers, and causing dramatic economic turmoil in places like Russia. These states, including Russia, Venezuela and Iran, among others, have built much of their economy upon extractionist policies and are quite vulnerable to the declining market price of oil. Consequently, in the short-term they see this as a catastrophe and look for ways to re-establish the high prices.
However, on the other hand, sophisticated players in the oil game realize that it was the rapid spike in gas prices in the United States that caused the first material and widespread shift in conservationist policies and social norms in over thirty years. What the threat of climate change and terrorism could not achieve, an increase in prices at the pump quickly accomplished. That is, namely, a fundamental change in people’s behavior and thinking towards oil consumption.
As The Mustache often notes, every time a petro-state elite hears us chanting “drill, baby, drill” or sees us failing in other ways to develop alternative energy sources, they must jump out of their seats and yell “‘Yes! Yes! Drill, America, drill!” because, as Friedman notes, “an America that is focused first and foremost on drilling for oil is an America more focused on feeding its oil habit than kicking it.”
Now, the real challenge for reform leaders like T. Boone Pickens and Al Gore, will be to inspire and lead the public in light of lower gas prices. As we’ve seen with the recent financial crisis, in our free-market society, imminent risks are often ignored until they’ve already passed the point of no-return. Whether the threat is to our national security or environmental interests, we allowed our oil dependency to continue far too long. We cannot allow this temporary drop in gas prices to lull us back into complacency again.