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Monday, February 07, 2000 Page: 6A
As our SUV of an economy barreled along last March, few of us noticed the
agreement among OPEC nations to curb oil production by 2.6 percent.
Some experts doubted OPEC nations, which had allowed overproduction to
drive prices down to a 12-year low of $11 per barrel, had the discipline to
absorb the short-term revenue losses from a production cut. Others predicted
the new U.S. economy – based more on the Internet than internal combustion –
could withstand inflationary pressure from higher oil prices.
While the latest economic figures show no slowing in our record-breaking
economic boom, Americans are finally starting to feel OPEC’s pain as crude oil
has neared $30 per barrel, gasoline prices have increased by about one-third,
and heating-oil prices have nearly doubled in the middle of a cold snap.
The elevated price of oil – expected to last at least until the OPEC
production meeting next month – should serve as a reminder to Americans that
we have done little to reduce our dependence on foreign oil since the last
price crisis during the Gulf War.
We have failed to develop alternative energy sources or expand mass
transit. We have abandoned efforts to reduce gas consumption by building,
buying and driving gas-guzzling trucks, SUVs and luxury cars. We have resisted
international agreements, such as the Kyoto Protocols, that could reduce the
use of fossil fuels.
Meanwhile, oil imports have reached 20-year highs. We continue to import up
to 50 percent of our oil and expect to import 68 percent by 2015.
Worse, our inaction has left us with little recourse when OPEC nations
tighten the supply of oil. Our untapped reserves are in wells that cannot be
exploited profitably, even at current prices.
Our strategic reserves would last only 90 days, according to the U.S.
Energy Information Agency, and aren’t large enough to have a significant
effect on prices.
The latest oil squeeze, whether it slows our economic growth or not,
reminds us that in the global economy, even the largest player cannot
completely control its own destiny. There was little the United States could
do to forestall the OPEC production cut, motivated largely by a cash-flow
crisis in Saudi Arabia worsened by low crude prices and a new government in
Venezuela more willing to cooperate with OPEC production caps at the expense
of U.S. interests.
There is much we can do to limit the effect of oil-price hikes in the
future, including increasing government incentives for manufacturers to
produce and consumers to purchase fuel-efficient, electric or alternative-fuel
cars. We should concentrate more attention on high-speed rail and other forms
of mass transit. We should expand access to natural gas to limit our reliance
on oil for heating our homes.
Market forces will most likely lower crude oil prices this spring, though
probably not to previous levels, according to most experts, and our economic
expansion might survive this latest bump in the road.
But we should take the oil and gas prices of this winter as a sign that
it’s time to get serious about putting our house in order when it comes to
energy conservation, alternative fuels and a lessening of our reliance on
foreign oil.