Comments on ''the case for a variable import fee on oil''

The see-saw of crude oil prices that our nation has experienced in this decade has severely damaged the petroleum industry as well as the economic health of important regions of the United States. Tens of thousands have become unemployed, many banks and savings and loads have failed, and several states' treasuries have been stripped. Now, our nation's oil imports are rising rapidly. The diminution of supplies from non-OPEC areas were brought about by two factors: low oil prices, especially the very low prices that prevailed during the summer of 1986; and by widespread fears that oil prices would continue to be unstable for the foreseeable future, thus making long-range capital planning and investment virtually impossible. Fred Singer's suggested variable import fee on oil is the best idea the author has seen to date both for stabilizing oil prices and for stabilizing oil price expectations without raising oil prices to unreasonable levels. Indeed, it seems likely that such an import fee could well result in prices that, over time, would be near the average of the high and low prices that would prevail if OPEC continues on its present path and oil prices continue to vacillate. A variable import fee wouldmore » have minimal long-run costs but very significant long-run benefits to the nation when compared to a continuation of the current situation. Until someone comes up with a better idea, Singer's variable oil import fee is the best suggestion so far for stabilizing oil supplies and prices.« less