The world price of crude oil has been on a roller coaster lately, gyrating above and below $100 a barrel. Several weeks ago, prices at the pump reached $5 a gallon in some places but seem to have settled down, at least temporarily, to less than $4 in many parts of the country. The elevated cost of gasoline—and of heating oil, aviation fuel and other energy products derived from “black gold”—understandably is a matter of great concern to most Americans.

Rising energy costs already have changed many families’ summer vacation plans, threatened to short-circuit the weak recovery from the Great Recession and, combined with recent increases in food prices, contributed to incipient inflationary pressures that foreshadow a lower standard of living and a return to the stagflation of Jimmy Carter’s presidency.

Fluctuations in crude oil prices are being driven mostly by uncertainty over supplies from oil-producing countries in North Africa and the Middle East, along with a weakening U.S. dollar and other political factors that largely are beyond the control of the much-maligned U.S. oil industry.

But they are not totally beyond Washington’s control. Just recently, President Obama reversed course once again, announcing policy initiatives that the White House claims will increase domestic oil production.

The president says he now wants to lease more drilling areas in the Gulf of Mexico and reduce bureaucratic delays in issuing permits for energy exploration and recovery.

But these latest moves should not be viewed in isolation, because Mr. Obama also has called upon Congress to impose some $21 billion more in taxes on major U.S. oil companies over the coming decade.

Since 2000, the U.S. oil industry has spent more than $2 trillion on capital projects. As a result, in 2009 total U.S. oil production increased for the first time in more than 25 years. If Congress approves the White House tax proposal—a knee-jerk response to oil industry profits—domestic oil companies are likely to move drilling rigs to other countries, such as Brazil, and invest less in alternative energy sources.

The United States imports about 60 percent of the oil it consumes, at a cost of more than $1 billion a day, some of which winds up in the hands of Islamist terrorist groups.

The lion’s share of proven domestic oil reserves lies offshore, below the ocean floor. The domestic oil industry has been investing huge sums of money in exploration, production and safety.

In response to last year’s Gulf of Mexico blowout, the industry has adopted better emergency measures to deal with spills. Five major oil companies—ExxonMobil, Chevron, Shell, ConocoPhillips and BP—collectively have established a $1 billion fund to support rapid response to such disasters, including the immediate mobilization of ships with oil-containment equipment. A consortium of 24 drilling companies has developed a device known as a “capping stack” for quickly stopping oil flowing from a malfunctioning deep-water well. The industry also formed an Institute of Offshore Operations to reduce the risk of blowouts and to make deep-water drilling safer.

Although the administration belatedly has recognized that exploiting domestic oil reserves is the key to reducing America’s reliance on imports from unfriendly suppliers overseas, that alone won’t guarantee greater production.

Encouraging production with one hand while discouraging it with the other is schizophrenic at best and counterproductive at worst.