All Commentary
Saturday, March 1, 1986

Perspective: The Decline of OPEC

The recent collapse in crude oil prices seems to have taken OPEC by surprise. Perhaps they would have been better prepared had they read University of Virginia Professor S. Fred Singer’s 1984 anthology, Free Market Energy. Addressing the question of “Future Oil Demand,” Singer wrote:

“Saudi Arabia and the other ‘core’ producers made two principal mistakes: (1) in 1979-80 they permitted the price of oil to rise; and (2) they did not bring it down right away . . . The Saudis apparently misjudged the degree of conservation the price rise would precipitate among consumer countries . . . .

“When consumers expect prices to rise, they will install insulation and other heat-saving devices or buy more fuel-efficient cars. Once the investments have been made, they are not likely to be reversed, even if oil prices go down. Industry has been particularly effective in making such changes, introducing new and efficient processes and replacing old machinery with energy-saving equipment, with particular emphasis on substituting other fuels for oil.”

Consumer sovereignty, more than any other factor, has reduced world oil prices to current levels.

Borrowed Time

The national debt recently topped $2 trillion, and is climbing ever higher. What does this mean for the average American? According to a recent study by the Tax Foundation, for every man, woman, and child in the United States, the Federal debt will reach $8,600 by the end of 1986, an increase of nearly $900 in a single year. This figure has quadrupled in little more than ten years.

What is the cause of this burgeoning debt? The study concludes:

“The debt grows because the American people are receiving government benefits, but passing on the costs of these goodies to future generations. More importantly, the debt is growing because interest charges on the debt are growing and the principal is not being repaid. In other words, more and more of the debt is caused by debt. And the process seems locked in an inescapable spiral.”

Thirty Years Ago

In the April 1956 Freeman, Leonard E. Read, founder and president of The Foundation for Economic Education, contributed his insightful essay, “On That Day Began Lies.” He started by quoting one of his favorite authors, Leo Tolstoy:

“From the day when the first members of councils placed exterior authority higher than interior, that is to say, recognized the decisions of men united in councils as more important and more sacred than reason and con science; on that day began the lies that caused the loss of millions of human beings and which continue their un happy work to the present day.”

These are powerful words, evoking images of Star Chambers, pogroms, and concentration camps. We Amer icans are inclined to feel safely removed from such proceedings. But coercion is often subtle, and when we act in a group, it is sometimes difficult to see the full import of our actions. Read brought the issue home with a parable he was to use in hundreds of FEE seminars:

Imagine this: Joe Doakes passed away and floated up to the Pearly Gates. He pounded on the Gates and St. Peter appeared.

“Who are you, may I ask?”

“My name is Joe Doakes, sir. I plead admittance.”

St. Peter scanned his scroll and said, “Yes, Joe, you are on my list. Sorry I can’t let you in. You stole money from others, including widows and orphans.”

“Mr. St. Peter, I had the reputation of being an honest man. What do you mean, I stole from widows and orphans?”

“Joe, you were a member, a financial supporter, and once on the Board of Directors of the Updale Do-Good Association. It advocated a municipal golf course in Updale which took money from widows and orphans in order to benefit you and a hundred other golfers.”

“Mr. St. Peter, that was The Up-dale Do-Good Association that took that action, not your humble applicant, Joe Doakes.”

St. Peter scanned his scroll again, slowly raised his head, and said somewhat sadly, “Joe, The Updale Do-Good Association is not on my list, nor any foundation, nor any chamber of commerce, nor any trade association, nor any labor union, nor any P.T.A., nor any church. All I have listed here are persons, just persons.”

How to stop the collectivized lies which threaten people everywhere? Read concluded:

“It is simply a matter of personal determination and a resolve to act and speak in strict accordance with one’s inner, personal dictate of what is right—and for each of us to see to it that no other man or set of men is given permission to represent us otherwise.”

  • The Foundation for Economic Education, founded 1946, works for a free and prosperous world.