ECONOMIC

it at the existing price. While the oil cutbacks created obvious new shorttermproblems for the economy, they also precipitated what was emergingas a serious long-run problem.It would be naive to assume that so fundamental a question as whetheror not we are entering a new era of scarcity for basic resources can beanswered adequately on the basis of the limited information now available.The question is nevertheless important for the following reasons.1. Basic resource industries utilize many minerals and metals that ultimatelywill be exhausted. Because the opportunities to correct faultypublic policy and private decisions affecting exhaustible resourcesare also limited, a high value to society accrues from accurate informationon future demands and supplies.2. Public policy has played a particularly important role in the evolutionof basic resource industries. Specific policies in varying degreesinhibited the capacity for adaptability that is inherent in the operationof the market system. During periods of sudden and substantialchange in world patterns of production and demand, these industriesmay therefore experience particularly difficult problems of adjustment.3. Most basic resource industries involve commodities that are tradedvery extensively in international markets. The volatility of thesemarkets, the commonly strong cyclical nature of the domestic industry,and the rapidly expanding consumption in foreign countriescan combine in such a way as to create significant political andeconomic tensions between nations. As international markets expandand nations become more economically interdependent, such tensionscould become more serious.4. The production processes in many basic resource industries interactwith the environment in an important and complex way that hasin the past resulted in abuse of the environment. Public policy toprotect the environment in turn interacts with—and in an ultimatesense may well determine—the appropriate public policy towardbasic resource industries.The following sections of this chapter seek to separate the enduring fromthe transitory factors that shape the Nation's energy and agricultural industries.This is a risky business. In the past the initial stages of new trendshave often been dismissed by wise men as unusual, even unique, events; andmany an authoritative forecast of an imminent new trend has proved to bebased upon random episodes.ENERGYEnergy prices have been generally lower in the United States than inother developed countries. Abundant supplies of coal, petroleum, and natu-111