The film Sideways ruined all that. Its protagonist rhapsodised about pinots, detailing the care the grape required and extolling the "haunting and brilliant" flavours it produced. Now my favourite pinot noirs have all increased sharply in price. Bottles that once cost $8 sell for more than twice that.

While I'm unhappy that my preferred wine has become so expensive, I wouldn't think of demanding that the government do something about it. We don't need new subsidies for pinot noir growers, or tax-free savings accounts from which one can fund pinot noir purchases. We shouldn't subsidise scientific research into alternative grape varietals and we surely don't need to study how to make a pinot noir substitute from corn.

Yet that's pretty much the story behind the surging oil and petrol prices we're experiencing. It wasn't a film that did it, but skyrocketing global growth, which has caused energy demand to soar. But like fine pinot grapes, oil supplies are limited, and it takes time to expand capacity. So prices have taken off. On 21 April, oil reached a record $75.35 a barrel in New York, partly because of concern that shipments from Iran and Nigeria will be disrupted.

According to the US department of energy, as of 17 April the average retail price for gasoline hit $2.783 cents a gallon, 54.6 cents higher than at the same time last year. It was the third week in a row that prices rose. The US government report noted that "some stations have already posted prices for regular gasoline that exceed $3 per gallon and it is certainly possible that average retail prices across the country could reach that level sometime this year".

According to the New York Times, opposition Democrats see this as a big political opportunity. The Democratic Congressional Campaign Committee sent a memo, the Times reports, that guides House candidates on the best way to take advantage of the situation.

The memo recommends that candidates highlight how energy companies receive billions of dollars in tax subsidies at the same time that they generate record profits at their customers' expense. Bad (read Republican) energy policy has made the mess worse.

The memo has its economics dead wrong. Current policy subsidises, perhaps excessively, alternative fuels and energy exploration, but hasn't done so in a manner that could possibly have had much impact on oil prices. Their effects are just too small relative to the rest of the market.

That doesn't mean we should have done more. It's natural to be upset about high prices, but making energy prices a political football can't possibly lead to good policy.

The best possible policy response to high prices is for the government to sit back and let market forces work their magic. Higher gasoline prices will increase demand for hybrid vehicles, encourage private firms to work hard to develop economical alternative fuels, and induce homeowners to adjust their thermostats. All of that is happening already. No government action is needed.

I doubt the political opportunists will mention it, but if we really want to accelerate the transformation of the energy sector, there is one reliable way to do it:

pass a massive increase in energy taxes.

If we do, gasoline and other fuel will become very expensive, and everyone will accelerate the search for alternatives.

Other approaches, including research subsidies, have been tried for years, and have still left us with an energy sector heavily reliant on fossil fuels. That's because even the recent high prices haven't made fossil fuel consumption uneconomical. It probably would take large tax boosts to do that.

Big subsidies for alternatives such as ethanol are less attractive because they require the government to pick a winner. The best approach would be to encourage businesses and citizens to find alternatives of their own, without constraints. A high energy tax does that.

Those high taxes would cause real pain today, which makes them extremely unlikely. In addition, they would merely speed up the process of finding other sources. Switching from fossil fuels now as opposed to a few years from now would have to yield very large gains for the high taxes today to be sensible policy.

So we should let the market tell us when to stop using oil.

The sharp increases in energy prices, like the pinot noir prices before them, have had a significant negative impact on me. But, interestingly, the merlot-bashing in Sideways has crushed demand, and some wonderful bargains can now be had in the merlot aisle. Who knows what might happen to gasoline prices if demand climbs for an alternative?

In the meantime, I'll just ride my bike to the off-licence and pick myself up a bottle of merlot.

Kevin Hassett is director of economic policy studies at the American Enterprise Institute. He was chief economic adviser to Republican Senator John McCain during the 2000 primaries. The opinions expressed are his own.