Price isnt right

The country was once again witness to the sordid spectacle of various interest groups fighting over oil revenue. This has happened too often,at too great a cost,to be continually ignored. The truckers strike was essentially in response to what they clearly saw as a window of opportunity: the price of oil had gone down,it was conceivably possible that,if they got in first,they could pressure the government into giving them some of the savings,in terms of lower diesel prices. The oil employees strike was similar: they clearly believed that,since their employers were no longer making huge losses,it was time to extract their pound of flesh. Who will demand a disproportionate share of the benefits from lower international oil prices next? Airlines,perhaps? After all,they stand to gain much from lower air turbine fuel. Blueline bus drivers? People who live in suburbs? Newspaper circulation departments?

There is one,and only one root to this kind of invitation to disruption,and it lies in our lack of willingness as a society to deal with the tough questions about energy reform. Energy is more expensive than it was before,and it might get more expensive still. The fisc cannot afford to go on subsidising it for ever. This is a simple truth that we need to accept,and adapt to. Until we do,as long as the government appears willing to subsidise it one way or another,groups will war with each other and with the government for extra benefits. The truckers and oilmen were right about this much: we have a window of opportunity perhaps three to six months in which we can take a fresh view of our energy sector. That fresh view must be directly linked to the market: the price of oil and oil products can no longer be left to the discretion of a bunch of bureaucrats,or the whims of the political process. Discretion invites disruption.

Naturally,the adjustment will be hard. It can be made easier by ensuring that,for example,the poorest who depend on kerosene are issued smartcards,such as have been on the anvil for below-poverty-line families for a while. This will ensure that subsidies,rather than being absurdly and counter-productively general as they are now,will become more targeted towards those they are supposed to help. Prices are low. Change now is relatively painless. The government has a few months to go. Everything is aligned: why is there no movement?