Oil and Sarkozy

M. Sarkozy, the anti-liberal of oil

There are principles and feelings. In the name of the former, Mr. Sarkozy defends pure and hard liberalism. In the name of the latter, he flouts it. Take oil. Hardly does the surge in world prices begin to be painful when the minister feels sorry for himself: sometimes on fishermen, sometimes on farmers, sometimes on truck drivers. Tax refund here, help there. And by January, it is promised, a general rebate, unless it is still targeted on the unfortunate owners of oil-heated mansions or the unfortunate owners of 4 × 4? We await the rest with interest, knowing that, in this area, generosity has only electoral limits.

It would be wrong to laugh about it. Because, by playing the firefighters on duty, Mr. Sarkozy forgets not only the theses he defends elsewhere, but also the lessons of the past. Above all, it seriously mortgages the future.

According to the liberal credo, the best signal, the only regulator of the market, is the price. When demand durably exceeds supply, the price increases, which encourages consumers to be moderated and stimulates producers; eventually, the market is automatically rebalanced.

This is exactly what happened after the oil shocks of the 1970s. If crude prices fell again in 1986 and then stabilized for fifteen years around a moderate equilibrium price (approximately $ 25 per barrel) , it is because all the Western economies, shaken by the crises of 1973 and especially of 1979, had reduced their consumption, diversified their energy sources and developed new oil fields in the North Sea, in Alaska, etc. . Supply greatly exceeded demand, leaving a comfortable cushion of slack capacity, particularly in Saudi Arabia, which used it to stabilize prices in the event of a problem.

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Encourage wasting

This beautiful weather is over. If crude prices have more than doubled in the last two years and are threatening growth, it is not only because Mr. Bush, by invading Iraq, has deprived the market of a good million barrels a day. A few years ago, Saudi Arabia would have easily made up for the shortfall and the accident would have caused only a brief turmoil in prices.

This is because demand, for fifteen years, has slowly swelled, to the point of equaling production capacities. There is no longer any reserve cushion, even in Saudi Arabia, the markets operate at a tight flow and prices are at the mercy of the slightest hazard: conflict, strike, blackout or cold snap.

The rise in prices is therefore a "good signal" which will bring consumers to their senses in time. Because it will take several years and billions of investments to increase extraction capacities. Until then, even if the accidental peaks settle down, oil has a good chance of remaining expensive, more expensive in any case than it has been for fifteen years. Unless global demand drops sharply, as it did after the first shocks.

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It will be more difficult. On the one hand, much has already been done, with technical progress and standards helping, to free oneself from the oil constraint. France thanks to nuclear power, Germany thanks to coal, Switzerland thanks to heat pumps, etc., are much less dependent than thirty years ago. On the other hand, the strongest drift comes not from developed countries, but from the new Asian economies, and in particular from China, which is booming. Finally, globalization, dear to the liberals, has an unpleasant and hitherto poorly measured corollary: it massively swells international trade, therefore transport (of products, of people), and ultimately the consumption of fuels: fuel oil, diesel, kerosene, etc. This is where the shoe pinches.

If oil still covers 35% of the world's energy needs, it is because it is irreplaceable in transport which, on its own, absorbs roughly two thirds of production and continues to increase.

The surge in prices is perhaps a chance. She recalls that hydrocarbons are not inexhaustible, that the world will have to learn to do without oil not so long ago, around the middle of the century, and that, by then, it will have to get used to to expensive oil. From this perspective, the government's short-sighted patronage appears not only derisory, but also counterproductive.

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Instead of letting prices discourage the most greedy users and reduce consumption in the long term, Mr. Sarkozy's tax giveaways break the signal and maintain, even encourage, waste. Even if it means redistributing part of the tax revenue derived from the rise in prices, it would be better, on the contrary, to encourage energy savings or the development of alternative solutions.

Help, for example, fishermen or farmers to invest in modern equipment that is less voracious in fuel oil. Support public transport, piggyback transport, heat pumps or biofuels, etc. And in any case let users of "oil pits" like heavy goods vehicles or 4 × 4s penalize themselves.

Véronique Maurus


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