IT’S always instructive when people diverge from the national stereotypes that we have, in our tidy minds, assigned to them. Evidence of assertiveness among Canadians, organisation among Italians or self-deprecation among Frenchmen tells us something that we have overlooked about native characteristics and forces us to revisit our assumptions.
The current American frenzy over oil prices is the latest fine example.
By and large, we assume that Americans are free-market sort of people. They think meddling in markets generally produces baleful outcomes (and they’re right, by the way). They’re suspicious of government intervention. They’re rugged guys who live high on the hog when times are good and take it on the chin when the going gets tough.
In state-swaddled Europe, it’s different. Anytime anything goes wrong, it is the government’s fault. Market failure is the default position from which every ill is presumed to originate. There’s an easy government solution to be found for all ills if only political leaders had access to the infinite wisdom possessed by the media.
But oil turns all this on its head. In Britain and most of Europe, when oil prices rise it’s a political non-event. Voters shrug and the media focus on more important matters such as the sexual antics of ministers or the injured metatarsals of football heroes. True, there’s the usual bit of finger-pointing at “fat cat” oil company executives and a bit of grouching over the garden fence at the price of four-star, but it never acquires much political momentum.
In America, the minute gasoline prices start to climb, the entire nation is transformed into a horde of gibbering, whining, state-dependent automatons, desperately pleading that Somebody Somewhere Must Do Something.
There are good reasons why the usual stereotype doesn’t fit petro-reality. Inhabiting a bigger, less densely populated country, Americans drive a lot more and feel the pain of higher prices more keenly. Petrol taxes are already a much higher proportion of the pump price in Europe, so there’s a sense governments there are already far enough bought into this particular project.
What’s more, in America, they still favour the old-time religion, the sort proselytised by pastors. In secular Europe, the new religion is climate change and its high priests are scientists and think-tankers. They warn with Old Testament fervour that the world needs to repent. In this, self-flagellation occasioned by higher petrol prices is not only tolerable, but good for the soul.
So, forced to drive long distances and unhindered by secular religious imperatives, Americans turn to their political leaders in times like this and insist that they do something really unwise when the oil price starts to pinch. The politicians never disappoint.
Democrats have responded to the latest surge at the pump by urging an investigation into “gouging” by oil companies. Excess profits by oil companies won’t be tolerated, it is said. I haven’t met anyone who actually thinks that squeezing oil companies will make a ha’porth of difference to the petrol price, but pinning it on them at least salves wounded wallets and is a useful way to indict the Bush Administration by association.
Republicans, demonstrating once again how urgently they want to reclaim the title of the Stupid Party back from the Democrats, have come up with something even better. They want to offer every American a $100 tax rebate. Just like that. One hundred dollars to spend how they please and the Treasury will just have to deal with it.
Fortunately the checks and balances in the US political system should ensure that such nonsense gets nowhere, and over time even petrol-hungry Americans will come to see that, just as the current pain is the result of market forces at work, so the market itself carries the seeds of its resolution.
Thirty years ago, at the last time of panic about oil prices, Americans consumed much more oil relative to economic activity. Now, according to IMF data, energy use per unit of economic output is down by about half — not just in the US, but in the developed world generally.
Rising affluence and changes in consumer behaviour have also reduced US dependence on oil. In 1981, Americans spent about 5 per cent of their disposable income on petrol; today it is 3 per cent. Think of it this way: these days, Americans complain bitterly when they have to pay $3 for a gallon of gas, but are quite happy to pay the equivalent of $25 for a gallon of coffee at Starbucks.
None of this is to say Americans are not energy-wasteful. Their consumption per unit of output is higher than all other developed countries. And policy can indeed play a role in changing Americans’ reliance on oil with its troubling geopolitical and economic consequences.
Whether you believe in the theology of climate change or not, there’s every reason for the government to use its power to shift patterns of energy use. Finally raising fuel-efficiency standards for cars, which have not changed in 20 years, as President Bush proposed last week, makes perfect sense.
But the market is already far ahead of all that. Sales of the thirstier heavy sport-utility vehicles fell 13 per cent last year and are down again this year. The popularity of hybrids is rising sharply and the big US car manufacturers are hastening their production schedules to get them on the market.
This has been driven by the simple fact of higher energy prices — caused by that old, brutal combination of rising demand and tight supply.
The market, that awful, corrupting, discriminating, resource-misallocating instrument of economic injustice that rewards oil companies and punishes the helpless consumer, is steadily guiding us to where we need to be — producing step gains in energy efficiency, shifting more investment towards alternative energy sources, and reducing dependency on a commodity that skews foreign policy priorities.
Foreseeing this epoch-making change that would be engineered by market forces, Sheikh Yamani, once the global icon of the energy business, is supposed to have said some years back: “The Stone Age didn’t end because we ran out of stone. And the oil age won’t end because we run out of oil.”
