Another day, another energy plan. On Sept. 29, Texas Gov. George W. Bush rolled out his third (by my count) action plan for reducing high energy prices. It's basically plan No. 2 modified with a handful of bad ideas borrowed from Vice President Al Gore: additional tax credits for renewable energy and energy efficiency, a federally managed home heating-oil stockpile, more R&D for "clean coal" technologies, and additional money for the poor to help them pay their heating bills this winter.
At the heart of each Bush plan is the call for increased domestic production to achieve "energy independence." OPEC market power, he contends, can only be combated by increased domestic production. It's one of the central premises of what passes for Republican energy policy, and it is nonsense.
First of all, a cutback in OPEC production raises the price of domestic crude just as much as it raises the price of Saudi crude. That's because the oil market is international, and domestic prices rise commensurate with world price. OPEC, whether we like it or not, can set the world price in the short run. "Energy independence" makes for good political rhetoric, but it's bad economic policy. Even if the United States imported no foreign oil, we'd still be in this particular predicament.