A DROP in the price of oil would be profoundly healthy for this country, and the world. It would be disruptive, but it would bring important benefits. Just as the higher prices had the effect of an enormous tax on everybody who uses oil, lower prices would be the equivalent of a tax cut.
But it hasn't really happened yet. A number of American companies have shaved a little off their domestic prices, and the Russians have apparently lowered the price at which they sell oil to Italy. There has been a lot of excitement in the futures markets. But the prices that really count are those set by the governments of the major exporting countries for their national production. They haven't moved yet.
If they do, the most serious impacts will inevitably fall on the exporting countries with large populations and great need for development funds. The most prominent examples are Nigeria, Indonesia and Mexico. There have been understandable anxieties in this country about the effect of lower oil revenues on Third World borrowers' ability to pay their debts. But among the big producers, only Mexico is dangerously in debt. The other big debtor is Brazil, which is an oil importer. Coping with the financial strains on Mexico, if prices fall, will be no more difficult than coping with the strains on Brazil if prices don't fall.
The dangers in falling oil prices ought to be familiar to Americans by this time. Markets tend to overshoot. It's entirely possible that the producers will lose control of the price and let it drop well below the level that even the present weak market would support. Then, of course, some months farther down the road, it would start to come back up. A descending price is no more likely to be stable than an ascending one. Political events have repeatedly shaken the oil markets, and doubtless will continue to shake them from time to time.
Americans would be right to view lower oil prices as an important kind of good luck, to be enjoyed while it lasts--but not necessarily to expect it to last forever. Sensible people will remember what happened in the 1970s because this country got careless about fuel consumption. While lower prices are welcome, they aren't a reason to repeat old mistakes. Holding down the use of oil, regardless of its price, will limit vulnerability to whatever surprises lie ahead.