America has no plan for what to do when an oil shock hits. Not only that, few if any discuss what could be done. Yet with a high risk of future volatility in markets, America needs such a plan.
Luckily, with the power of the Internet, policies can help Americans facing high gas prices get out of their cars to telecommute and virtually shop and communicate when prices skyrocket upwards again. And from experience, we know which industries tend to get hammered by high oil prices and can prepare to bolster them when needed.
Currently during oil price shocks, politicians tend to resort to rhetorical policy proposals that accomplish nothing in the short-run for consumers. The latest set include investigating price gougers or having a task force on speculation (even though the CFTC has offered proposed new rules that would be helpful but the administration has failed to implement them); thinking up ways to increase taxes of the five largest American oil companies; and jawbone on why oil drilling or investment in alternative energy should be higher.
Policy options don’t end at the SPR, however. In terms of demand, we should realize that the Internet makes a lot of traveling that would’ve been essential during in the 1970s oil crises much more flexible today. 90 percent of miles driven are for work, shopping or social reasons. With the Internet, telecommuting and finding others who want to carpool is easier, consumers can shop online, and Skype provides face-to-face communication without the need for travel.