Good economic policy provides a reality check in which dreams are measured against resources. It can set a strategy that permits many of those dreams to be realized over time. Such policy is hard to achieve because it is more fun to talk about recipes while running up your credit card in an elegant restaurant than it is to cook a meal at home.

For many years, our political leadership has been behind the curve on energy, unable to take the political risks required of good policy. Even Bill Clinton, whose fiscal policy brought great improvements to the budget, failed to pursue sensible energy policy. Indeed, Al Gore, who has taken the lead in highlighting the danger of climate change, has neglected to make the politically unpalatable observation that energy prices must rise—a lot—to reflect energy’s true cost. And George Bush has shown little taste for any sort of reality-based economic policy.

If the next president is any good, he or she will have to get ahead of the energy curve that will be a dominant political and economic theme of the twenty-first century.

The summer before the election that brought George Bush to power in November 2000, the average price of gasoline nationwide reached the highest level in ten years, more than $1.60 per gallon. The summer before Bush’s reelection, four years later, the price of a gallon passed $2.00, though barely. In 2004, as in 2000, almost no one would have predicted that gasoline soon would cost more than $3.00 a gallon, yet that is where the price hovers now, for the third time since hurricane Katrina damaged refineries in 2005.

The upward spikes in gas prices have been blamed variously on weather damage, growing demand from China and India, and refinery maintenance problems in the United States. Nobody can be sure if the price of gasoline is being manipulated by a multinational petroleum refining cartel (working with petroleum producers) or if competitive markets have produced such high prices. We may find a smoking gun that proves price manipulation, as we did for electricity prices following the collapse of Enron, but it is more likely that no such evidence ever will emerge.

In any case—whether gasoline cost $3.00 today due to market manipulation or not—we can be quite sure that prices will continue to rise over the lives of our children and grandchildren. Looking just at the rising need for energy to fuel economic growth, we can forecast (with appropriate modesty, for such a long time horizon) that energy demand will grow twelve fold over the next one hundred years, and that nine-tenths of this surge will come from economic growth in today’s “developing countries,” led by China and India. At the same time, known petroleum reserves will continue to shrink, especially in today’s industrialized countries.

But more than a squeeze on the supply of fossil fuels, we can anticipate an environmental imperative to stop using fossil fuels. Many politicians frame pollution and climate change as moral issues. That may be a way to rally the troops to enter battle, but ultimately, the challenge is not to join a crusade but to solve technical and economic problems.

The simple fact is that we must drastically reduce our use of fossil fuels. “We” in this case means everyone on earth. Perhaps a drum major of ecological righteousness can lead us all to a better world, but I would bet first on economic incentives to do that job. If people are to drive more fuel-efficient vehicles, if they are to use less fuel to heat their homes, and if they are to buy local products rather than goods shipped thousands of miles, price changes will be a big part of the reason they change their practices.

The middle-class family today has two cars a no housemaid. A century ago, a family similarly situated in the income distribution would have had no cars and two housemaids. Why? The price of cars has fallen drastically relative to income while the price of housemaids has risen. Mores and lifestyles and values all have played a role, of course. But if you want to explain changes in what people buy, it is not a bad idea to start with changes in prices.

The price of gasoline could have been $3.00 ten years ago if we had passed a tax that reflects environmental damage. The price of gasoline could be $6.00 in 2009, rather than, say, 2015, if the next president uses his or her powers of persuasion to convince the public that it is good economic policy to tax gasoline much more heavily.

Such a policy would alienate petroleum producers. The automobile workers’ unions would howl. Indeed, working families everywhere would have hostile reactions to such a big new tax.

But in ten years, gasoline will cost $5.00 or $7.00 or $9.00 a gallon anyway. And if the price does not hit $7.00 in ten years, then it will in fifteen. China will have millions of new cars competing with American owners for scarce petroleum supplies. The sea level will continue to rise and storms will become fiercer. We can wait for all that to happen, and react timidly when it does, or we can do something now.

Which candidates will have their feet firmly enough on the ground, and their eyes on the future, to take a risk to do the right thing on energy policy?