The present political climate is not only unsuited for, but also threatening, to formulating a long run, rational energy policy in the U.S. In a democracy, economic policy is formulated in the political process. This is as it should be but situations, where political rewards are such that short run policies with vast amounts of popular appeal are favored over alternative policies, are indeed dangerous. The strong belief that certain products, including energy should be available at low prices is held by many and leads to much rhetoric and confusion of basic economic issues. Increased energy supplies in the long run are available only at higher costs and the feeling that energy prices should be rolled back to some lower level does not negate this fact. Situations in which political leaders offer blatant appeals to the public's ignorance of basic economic factors is not only irresponsible but creates a real possibility that legislative actions will lead to even greater problems in the future. This is a classic example of the conflict between correct economic policies and rewarding political strategies. It is difficult to underestimate the risks and dangers if policy makers were to succumb to short run political objectives in formulating energy policy.

The present atmosphere is also diverting attention from the need to recognize that energy policy means more than oil policy. Domestic and international events have focused attention on oil and made energy problems appear to be limited to oil. This neglects problems such as natural gas pricing methods, the development of synthetic fuels, and the entry of oil firms into coal and uranium. Events have combined to focus attention on oil but clearly the proper response is an energy policy rather than simply an oil policy.

FINDINGS