Copyright 2000 The Denver Post Corporation
The
Denver Post
March 29, 2000 Wednesday 2D EDITION
SECTION: DENVER & THE WEST; Pg. B-11
LENGTH: 649 words
HEADLINE:
Lessons from the '70s oil shock
BYLINE: By Robert
Repetto, GUEST COMMENTARY,
BODY:
Go ahead, senators
- repeal the gas tax. Let the Saudis, the Nigerians, the Venezuelans
and the Indonesians tax us instead. By holding output down, they can
drive oil prices up and the additional oil revenues from higher crude
prices flow right through their national oil companies into their
national treasuries.
The opportunistic politicians now clamoring to
repeal the gas tax obviously haven't stopped to ask why oil prices
have risen so sharply. The answer is that a gap of two million
barrels a day has emerged between world demand and world supply. That
gap quickly exhausts inventories and reserves and must be closed.
This imbalance is not the result of a sudden
supply interruption like the one that precipitated the 1970s 'oil
shock.' It's primarily the consequence of growing demand for oil
products, mainly gasoline. Prices have risen to close that gap.
Over the coming months and years, higher prices and
pilgrimages by our politicians to supplicate the oil sheiks might
squeeze more production out of the ground, but today's higher prices
close the gap mainly by restraining consumer demand. Though
discomforting, we're better off to restrain consumption through
higher prices than to repeat the sorry experience of gas rationing
and long lines at the pump. And it's basically our own darn fault.
The United States accounted for more than half of the
world's demand growth over the past two years, continuing the steady
rise in U.S. gasoline consumption. Americans have been driving
more miles. Vehicle miles traveled have increased 50 percent
since 1983, and the low gas prices since then have made fuel
efficiency seem almost irrelevant to the car buyer. The auto
companies haven't complained, since they've been able to inflate
their profit margins by tarting up their pickup trucks and selling
them as gas-guzzling SUVs.
Despite repeated warnings that the
United States was becoming more dependent on imported oil in general
and OPEC oil in particular, our politicians have refused to take any
action to restrain the growth of demand. Consequently, imports now
supply more than half of our consumption demands, up from 35 percent
in 1974 when the oil shocks struck.
The politicians froze
corporate-average-fuel-economy standards and
declined to apply them to 'light trucks,' the fast-growing fleet
component that includes SUVs. The politicians pretend that gasoline
taxes in this country, which are only a fraction of those in Europe
or Japan, are an outrageous imposition. In fact, they're a necessary
tool to get companies to market more energy-efficient vehicles and to
get consumers to buy them.
The pity is that we're letting the foreign
oil producers wield this tool instead of doing it ourselves. The
revenue from higher gas taxes could have paid for improved
transportation options or helped preserve Social Security and
Medicare or helped to pay down the national debt.
Instead,
we're paying those taxes, in the former of higher prices, to the
foreign governments whose national oil monopolies export us the crude
oil, and we're getting no benefit whatever. Our short-sighted
politicians even want to reduce the gas taxes we currently have, even
though those reductions won't lead to lower prices at the pump as
long as the demand-supply imbalance exists. They'll just transfer
even more money to foreign producers.
The lesson of the oil shocks was
that saving energy and reducing oil dependence are important. It's
not a lesson that American learned well. There's a saying that those
who ignore history are doomed to repeat it. Must that apply to U.S.
energy policy?
Robert Repetto is an environmental economist
now serving as a Wirth Fellow at the University of Colorado at
Denver.
LOAD-DATE: March 29, 2000
