Can We Blame Jimmy Carter For This One Too?

Today in class I was struck by the oil price graph. As was indicated by the graph, around 1980 oil prices hit its apex and since have been somewhat stable over the long run. What disturbed me was the general ascension in prices up to today. I know that this increase in prices has nothing to do with “dwindling” reserves, so what is the reason for the steady increase in price? At first I thought of the political factors (war in Iraq, etc.) but oil prices can not be on the rise only b/c of this single factor. I picked up this essay off of the Cato Institutes “Regulation” publication. As I understand it, the problem with the instability in oil prices is due in large measure to OPEC’s manipulation of oil production. My question is why we continue to do business with OPEC if they persist with their price gouging techniques? Why don’t we try and adopt more conservationist policies with regards to oil consumption? If we can’t control the supply side of the problem due to high costs then we should manipulate demand in a way that forces OPEC nations to stop there manipulation of prices and lower the price of oil.