The Answer’s Clear: Use Less Oil

Saudi Arabia is remembering one bleak lesson of the energy crises of the 1970s even as Americans seem determined to forget another. The two great oil shocks of that decade, which saw the price of a barrel of crude oil increase twentyfold to almost $40, had devastating global consequences, with the developed world’s economies hit especially hard. Economic growth stagnated, unemployment swelled, inflation soared and oil demand plunged.

The lesson the Saudis are recalling as they prepare to raise their oil output by 500,000 barrels a day is that when energy prices are pushed too high, everyone ultimately pays the cost, producers along with consumers. The lesson Americans have chosen to ignore is that the remarkably effective energy conservation measures they adopted in the 1970s are no less relevant and necessary now than they were then.

In March, crude oil prices hit a 10-year high of $34.37 a barrel. At the beginning of this week the price still stood above $30. The Saudis, with considerable prodding from Washington, have concluded that a price around $25 a barrel would meet the needs of producers without adversely affecting the international economy. And because the Saudis own more oil than anyone else and have the capacity to pump more than 2 million additional barrels a day, they are in a prime position to exert pressure to push prices down. Their action, which came just two weeks after OPEC agreed to increase its total production by 708,000 barrels a day, took the 10 other members of the cartel by surprise. OPEC has a meeting scheduled in Algiers this weekend. It is likely to be a stormy session.

But a drop in oil prices, while welcome, would also be a mixed blessing. The problem is that Americans continue to consume more oil--the majority of it imported--than is healthy, and cheaper prices would feed that appetite. That’s why election-year moves to ease the burden on motorists by suspending gasoline taxes are goofy. Reductions already have been adopted in Illinois and are now being weighed in other states and by Congress.

Sound national policy dictates that steps should be taken to curb oil demand, not encourage it. The place to start, as in the 1970s, is with motor vehicles.

Oil consumption today is 10% higher than it was a decade ago, and a major reason is the increasing sales of sport utility vehicles. A federal law that foolishly classifies SUVs as light trucks instead of autos exempts them from corporate fuel economy standards, letting manufacturers meet the already inadequately low standards even as gas-guzzling SUVs account for a rising proportion of their sales. The technology exists to make SUVs more fuel-efficient. What’s required is a mandate on manufacturers to do so.

One response to the oil shocks of the 1970s was the discovery that there are innumerable ways to conserve energy, such as through more fuel-efficient cars and better-insulated buildings and appliances that run on much less electricity. That discovery remains valid today. It’s the ethic to act upon it that needs renewal.