WITH Wall Street suddenly abuzz with talk of crude oil prices reaching $US200 a barrel and the three remaining presidential candidates apparently vying with one another to present the most politically opportunistic (and economically absurd) energy "plan", it is becoming increasingly clear that America's addiction to cheap oil is likely to be a major issue this November.

Unfortunately, if the recent level of discourse is any indication, there is little likelihood of anything useful emerging from the political debate. For that to happen, there would have to be an acknowledgment by politicians that the forces of supply and demand prevail in the global oil market, just like other markets, and are at the root of US dependence on imported oil.


Instead, as exemplified by the bizarre proposals from Hillary Clinton and John McCain for federal petrol taxes to be waived this US summer to alleviate high prices, politicians are barely able to even acknowledge the role of US demand in the oil market.

None of the political "solutions" being considered in Washington for high petrol prices even mentions consumer demand. Instead, Congress wants a quick fix by reducing the rate at which the US is building up its "strategic reserve" of crude (which is scheduled to double in size over the next year), or by tinkering with the tax regime, or by pressuring foreign producers to pump up their output, or by regulating commodity exchanges to deter "speculators".