The economic effect on America of a new era of higher oil prices looks to be minimal; the political effect, however, could be considerable. After their collective huffing and puffing in Vienna this week, it looks like OPEC's 11 member countries will agree to boost production by 1.7 million barrels a day, a less-than-monumental increase designed to stabilize prices at their current level. This new price plateau, says Robert Kaufmann, professor at the Center for Energy and Environmental Studies at Boston University, will probably mean few broad-reaching economic ramifications. "Emphasis on 'probably,'" says Kaufmann. "We've seen these prices before, although not for so sustained a period. But in and of themselves, they won't create any adverse reactions." That sanguine attitude is due, in large part, to the general shift in the economy from oil-dependent heavy industry to high-tech business.
Politically, the horizon doesn't look quite as rosy. Republicans are drooling over the potential to exploit Energy Secretary Bill Richardson's recent admission that the Clinton administration "was caught napping" on OPEC's actions to increase oil prices. In particular, they are likely to focus on the gap between the 2.3 million-barrels-a-day production increase that Richardson was asking for — a level that could have resulted in a price reduction — and the 1.7 million-barrel increase that appears likely. In a country that has embraced the gas-guzzling SUV with enthusiasm, look for Vice President Gore to make special efforts to smooth motorists' ruffled feathers in time for the November elections.