Let there be light.(on the right)(petroleum industry)(Column)

NEW YORK, APRIL 2

IT was, to put it calmly, infuriating to be told by OPEC, at a moment when gasoline prices were rising, that production of oil would be reduced by four percent (one million barrels per day). A Saudi prince sought to ease the pain, present and prospective, by informing President Bush that Saudi Arabia would guarantee the world against any shortage of oil. That was a way of saying that a diminution in supplies, if critical, would be offset, noblesse oblige, by a Saudi hand opening up the faucet, as needed. It was nice to hear this, and also humiliating. The industrial world winces on being reminded of our increased dependency on the technology, reserves, and graces of Saudi Arabia.

But perspective here is useful. We consume, in the U.S., about 20 million barrels per day, importing 10 million of them. It is comforting to remind ourselves that we are the largest producer of oil (about 9 million barrels per day) in the world. But our reserves are not unlimited, while the Saudis are confident that, if necessary, they could ramp up production to 10 million barrels per day. Business Week reports that "if demand is really strong [the Saudis] insist, the kingdom could build up to 12 million bbl. a day by 2016 and hold that level out of existing reserves until 2033."

Again in search of perspective: The pain of our gasoline prices doesn't lessen by inspecting the scene abroad, but comparing prices blunts the edge of our indignation. We have been paying, according to U.S. government figures, an average of $1.76 per gallon of gasoline. In constant dollars, we paid $2.99 for a gallon in March 1981. And the price Americans pay for gasoline is about one-third the price Europeans pay.

We do have, of course, government reserves. These amount to 22 billion barrels--good, by simple arithmetic, for about three years. Obviously the use of these reserves is not to be contemplated as the answer to a four percent OPEC reduction.

We move inevitably to the question that politics simply refuses to take up, an approach not likely to be heard, in the months ahead, from the lips of George Bush or John Kerry. It ...