Looking ahead--oil.(on the right)(Over a Barrel: Breaking the Middle East Oil Cartel)(Book Review)

NEW YORK, AUGUST 12

RAYMOND J. LEARSY has written a book memorable in the sense that nightmares can be memorable, but also useful. If the nightmare is that you died of a drug overdose, and the memory of it causes you when in command to draw back from the marginal dose, then the nightmare has served a purpose. Learsy writes (his book is called Over a Barrel: Breaking the Middle East Oil Cartel) about what could happen if we continue to go as we are going. The price of gasoline today is 60 percent higher than it was a year ago. Such data require extrapolation.

After 200 pages of history and analysis, telling the story of the founding of OPEC, of manipulations and broken promises and extortion and opportunism, Learsy acknowledges OPEC's success. Sixty-dollar-a-barrel oil is certainly a success, but the body on which it feeds does not expand, pari passu, with the successes of OPEC. It does not matter how much you consume, if the supplies are inexhaustible and your capacity, insatiable. But here is what we might be facing if oil rose to $100 per barrel.

I quote from the author. Commuters suddenly forced to pay $2.50 or more for a gallon of gas began to brown-bag their lunches, inching away from restaurants. Americans who could afford a vacation went on shorter trips, putting a dent in the tourist industry. Trucking companies hauling everything from wines to furniture imposed a hefty surcharge on shippers, who passed it on to their customers, who then passed it farther down the line to the retail buyer if they could.

The crunch forced many independent truckers to sell their rigs, playing havoc with shipping. Higher fuel costs sent the U.S. Postal Service deeper into the red and threatened the survival of FedEx and UPS. With the break-even point for airlines a distant memory at $31 a barrel, sharp fare boosts were the only option. Traffic spiraled into a tailspin, and one airline after another declared bankruptcy.

But of course, oil is vital to everything from plastic picnic forks to printer's ink. Manufacturers raised prices across the board, and potholes went unfilled in city streets. Municipal and factory employees were laid off or fired. Foodstuffs of every kind reflected the higher costs incurred by growers and shippers.

Runaway prices on just about everything took the Federal ...