Pump perils

August 14, 2005

FEELING PINCHED at the pump yet? Knocking off more errands in the same car trip? Leaving the gas guzzler in the garage?

With gasoline going for about $2.40 a gallon in this region last week, such prudence wouldn't be surprising. After all, for a family driving 25,000 miles a year - at, say, 20 miles per gallon - the increase in fuel costs over the last year, about 50 cents a gallon, amounts to more than $600.

But gas consumption has risen this year. The economy is humming. And consumer spending is robust.

With the price of a barrel of crude oil hitting new highs every day last week - unadjusted for inflation - there's a highly technical debate about the sources of the continuing market spike and how high it could go. Suffice to say, there're plenty of causes at which to point:

With China industrializing and America guzzling, global demand has been bumping up against - or even exceeding - supply. Refinery capacity, down almost 20 percent in the United States, is tight. Worries abound over the political instabilities of major producers - the Saudis, Russians, Nigerians, Venezuelans, take your pick. And then, not surprising in such a market, there's traders' speculation.

Another question less often asked but more under Americans' collective control is this: How much will the cost of gas have to rise before U.S. demand hits the wall? Every time Americans pull into the gas station and fill up their rigs, they're engaged in a vast and continuing economic experiment - one with potentially perilous consequences for this nation's security.

Much too grave a proposition? Well, the U.S. trade deficit - largely funded by going into hock to China, Japan and other foreign interests - is widening at a record pace, driven, of course, by the cost of oil imports. And last week, in just the latest example of America held hostage by oil, Iran countered threats of U.N. sanctions over its nuclear ambitions with a threat that the West would end up paying more for its oil.

Some analysts predict world oil production could peak sometime in the next 20 years. But the really scary thing is how little new there is on the American homefront. (Remember President Jimmy Carter's plea to don sweaters?) In the last 25 years, has Detroit really tackled fuel efficiency? (Japanese carmakers are now way ahead on hybrid technology, this century's most promising approach to greater efficiency.) How about Washington? (We've already said the latest energy bill is a farce.) What of mass transit? (It goes begging.)

With so much at stake and so few government forces pushing for fuel conservation and efficiency, the sad truth is that America's best hope for limiting its oil security risks may be market forces - oil topping $90 a barrel, its previous, inflation-adjusted, high. No one would choose that, but consider it the inevitable price of decades of inaction.

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