Gas is cheap

... but is that good? To escape OPEC's grip, current prices shouldn't set our energy strategy

Can't say the oil companies haven't delivered their share of holiday cheer. Gasoline prices are now so low -- in the $1.50-$1.70 range -- that if those figures had been posted during sky-high July, we'd have guessed ExxonMobilShellBP had begun pricing its product by the quart.

How long these prices will last is another question. OPEC, for one, is not pleased. The cartel's members are aiming to cut oil output by a record 2.2 million barrels a day. The goal is to put upward pressure on prices, lest the oil oligarchs be reduced to subsisting on $40-a-barrel oil. The Saudis say $75 might be fair. (The price was $140-plus in July.)

Production cuts, however, may not do the trick if the world economic outlook remains ultra-gloomy. Americans, caught in a severe downturn in which $1.50 gas is a lonely bright spot, could find ourselves hoping for an uptick at the pump. It might signal a higher-octane economy ahead -- maybe.

What's certain is that low oil prices are a disincentive to drilling, to refining and to adding capacity to the worldwide system for processing oil and natural gas. All over Planet Petroleum, a slowdown has hit. This is worth pondering by those who, just recently, thought only of "Drill, baby, drill!"

The hard lesson is that market forces and the Middle East largely determine the price we pay. Regulations on drilling in the United States -- the rules the Republican National Convention railed against -- are a far smaller factor.

While it makes sense to open up some new areas for drilling -- although not in sight of our national parks, for Pete's sake -- the chief influence on domestic oil production is the pecuniary prospects of new wells and refineries. If the payoff isn't there, it isn't there.

Right now, it's not. As The New York Times reports: "The list of projects delayed is growing by the week. Wells are being shut down across the United States; new refineries have been postponed in Saudi Arabia, Kuwait and India; and ambitious plans for drilling off the coast of Africa are being reconsidered." Oilfields with higher than average recovery costs, such as the Bakken Shale in North Dakota and Alberta's oil sands, have seen steep cutbacks. Domestic drilling could drop by an estimated 41 percent next year.

Even during the drill, baby, drill frenzy a dilemma was apparent. To produce the lower pump prices that drivers crave, the world price of oil must be high enough to tickle oil companies' profit bones. Otherwise they won't invest. While the pump price can be too high, it can also be too low. In that case, OPEC tries to push it up.

This would all be a matter of alternately cursing and curtsying to Big Oil, except that roller-coaster prices disrupt much-needed progress in how we use energy.

It's not only the oil-sands projects that get the ax when prices fall. Renewable energy projects of many types can't compete with cheap oil and cheap natural gas. At the least, they stall.

If we're ever to escape this oily mess, government policies must discourage high consumption and encourage efficiency and alternative energy sources. It is not an easy path, but it's the one the Obama administration should take.