U.S. SHOULD AVOID OIL SECURITY PANIC

By declaration of the Department of Commerce, rising oil imports threaten U.S. security. What is the nation to do?

The crisis knows no bounds. Countries able to produce more oil than they need are selling to countries that need more oil than they produce. Who knows what grief might result from this sinister resort to trade?

PANIC AND POLICY

Panic is no way to make energy policy, yet panic is where misplaced concern over national security leads. Rising oil imports might once have threatened U.S. security; they don't now. The world has changed. The oil market has changed. What threatens security is anything that jeopardizes market mechanisms, including trade, for what remains a strategically important commodity but is, first and foremost, a commodity.

If rising oil imports are for any reason bad for the U.S., the only reasonable response is to produce more oil. The U.S. can do so and still allow market mechanisms to work. It can open federal land to oil and gas leasing. It can relax taxes and royalties when oil and gas prices are low. It can lighten environmental regulation without harming nature.

It should do all these things. But it doesn't need national security for motivation. More leasing, flexible taxation, and rational environmental regulation make simple economic sense. And, like everything else, they would work most efficiently in markets left free to respond to the upsets certain to occur.

Producing more oil seems not to be on the agenda, however. Early indications are that the Clinton administration will use the yet-unpublished Commerce Department finding to press the Department of Energy's gas-before-oil policy agenda. That would be a mistake.

Natural gas is a wonderful fuel-all the more so now that wellhead price decontrol and transportation overhaul have lowered methane's lawyer-to-BTU ratio. Like all commodities, however, gas must find its own way in markets. It is too efficient, too clean, and too domestically abundant to sully with consumption mandates. Gas market prospects are better than ever because government withdrew from the business. Why turn back the clock on progress like that?

And why tell a world of ready suppliers of liquid hydrocarbons that the U.S. would rather pay dear for domestic energy-by forcing fuels other than oil into uses for which they're less suited-than buy foreign oil cheap? This can only hurt international trade, the blossoming of which counts high among reasons that a contrived oil shortage poses no reasonable strategic threat to any single importer.

FUEL PREFERENCE

Official preference for gas - or any fuel - in markets where oil serves best thus hurts national interests by limiting market freedom and by discouraging international trade. It also sneers at an industry fresh from the rigors of meeting an overly strict, unnecessarily complicated, and recklessly applied government recipe for gasoline. Refiners performed this technological and logistical feat despite a capricious ethanol mandate and the last-minute defection by counties that wanted the fuel until resident motorists saw how much it cost. Will the government now undermine gasoline markets by mandating sales of vehicles that run on fuels that otherwise could not compete?

It is the job of government to worry about the security implications of things, so the republic probably will survive this hilariously tardy federal concern over oil imports. Energy policy, however, should emerge from economic interests. National security is a factor in those interests, but not the deciding one. The war is over. Free markets won.