I don’t know, it’s a mystery.

I don’t buy the hype that rising oil prices signal the death of our economy, or even significant long-term harm. This isn’t silly denial. There will be consequences, and many of them will be economically painful. Such is the manner of change. But this is just another in the always present process of creative destruction. Because we’re intelligent, we will adapt. We did so in the late 1970s when we entered Peak Oil for the first time. We’ll somehow survive again.

That could’ve been the direction of Robert Samuelson’s latest column on the latest developments in oil prices and markets. It seems like he holds the seed for this opinion. Late in the essay:

How can we retrieve some of our lost power? The first thing is to get out of denial. Stop blaming oil companies and “speculators.” Next, we need to expand domestic oil and natural gas drilling, including in Alaska. Although we can’t “drill our way” out of this problem, we can augment oil supplies and lessen price strains. It might take 10 years or more, because new projects are huge undertakings. But delay will only aggravate our future problems.

He’s essentially calling for action rather than the whining and sob stories about retirees selling their RVs. We’re going to get there eventually. Better to start now.

But – you had to guess that was coming – this wouldn’t be a Robert Samuelson column if he didn’t work the government into his solution as a necessary, integral ingredient. Economics somehow demands it. He concludes:

Finally, we need to realize that high prices may stimulate new biofuels from wood chips, food waste and switch grass. Production costs of these fuels may be in the range of $1 a gallon, says David Cole of the Center for Automotive Research. If true, that’s well below today’s wholesale gasoline prices. To assure new producers that they wouldn’t be wiped out if oil prices plunged, we should set a floor price for oil of $50 to $80 a barrel, says Cole. This could be done with a standby tariff that would activate only if prices hit the threshold. Oil prices are unpredictable, and should a price collapse occur, Americans wouldn’t be deluded into thinking we’ve returned permanently to cheap energy. We’ve made that mistake before.

We need to find new, cheaper, better alternatives to oil. But economic competition might mean new producers could be harmed by the realization of their risks. Who knew, right? So we should set a floor price for oil, apparently even if new producers can produce fuel at a price equivalent to or lower than the pre-established guarantee of a standby tariff. The possibility for rent seeking and unnecessary subsidization is obvious.

So. High prices are bad. Low prices are bad. Which is it?