No Mileage In High-Octane Talk

Cancel the panic. The price of gasoline is going down. Before we all forget the sight of presidential candidates racing to save us from a market cycle, let’s think about what the fiasco says about our country and its leaders.

It says that we are shortsighted, economically illiterate, susceptible to conspiracy theories and led by politicians who’d rather pander to our ignorance than tell us the truth.

We also have our good qualities, such as a free-market economy that repairs its own ills and is the envy of the world, if not of Americans themselves.

If we and our leaders really understood the market, why then did President Weather Vane - the planet’s leading expert on public sentiment - respond as he did when gasoline prices jumped? Sharing our pain, Bill Clinton ordered a federal investigation of the oil companies and released a completely insignificant amount of fuel from the national petroleum reserves.

Meanwhile, Bob Dole, whose closeness to industry should imply a grasp of economics, proposed a temporary cut in the federal gasoline tax - which would have worsened the federal deficit.

That idea has fizzled, along with the jump in prices. The marketplace is correcting itself - without the government’s help.

Alas, it is a national trait to blame complex problems on simplistic conspiracy theories. But there is no evidence, so far, of an oil industry plot. There is clear evidence that industrial efficiency has made U.S. fuel prices one of the world’s best bargains. Since the early ‘50s, the gasoline price has risen sixfold while the prices of cars, groceries and homes have multiplied by a factor of 15 to 20.

One industrial efficiency is “just-in-time delivery.” Oil refineries try to produce no more than what the market needs, when it’s needed. That slashes storage costs. Often it works. But this year, surprises knocked the system out of whack. Expected oil production from the North Sea and Iraq was delayed. A bad winter delayed conversion of refineries from heating oil to gasoline. Motorists began driving faster in bigger cars.

Economics 101: When demand for a commodity outstrips supply, prices rise. But when demand soars, suppliers respond.

Sure enough, refineries are going full blast on gasoline, and the price has started to fall.

Bottom line? The market was solving this problem while government still was flapping its gums. Expect less of politics and more of the marketplace and enjoy the summer. Pass the lemonade.

, DataTimes The following fields overflowed: CREDIT = John Webster/For the editorial board