Bad news about the financial and economic crises just keeps coming, but in recent weeks there's been rare good news: a major drop in gasoline prices. In the short to medium term, it is true that falling oil prices are good for the economy. Everything from buying California grapefruits to operating school buses becomes cheaper when the price of gas goes down. Consumer confidence increases; people spend money; the economy is boosted.
But there is a dark side to declining oil prices and the resulting short-term economic benefits: The public and policymakers will breathe a collective sigh of relief that the energy crisis has passed, and gratefully take that hot issue off the national agenda. Stricter legislative requirements and green incentives for automakers will be gone, funding for research on alternative energy sources will dry up, and the nation will return gleefully to gas-guzzling SUVs (truck sales have already started to rise). Campaign rhetoric about borrowing money from China to pay Saudi Arabia for oil will be quickly forgotten.
"But our leaders said it's a national security issue," you protest. "That won't happen!" Recent history shows otherwise. The baby boomer generation remembers well the oil shocks of the 1970s and early 1980s. The national agenda then was full of debates about alternative energy, energy independence and the economic pain of high oil prices. Jimmy Carter wore sweaters in the White House to promote energy conservation.
Then, over the course of the 1980s, oil prices declined to pre-1973 levels. Ronald Reagan had Mr. Carter's solar panels removed from the White House. The 1990s saw the return of big, gas-guzzling cars. Little was heard in the national debate about alternative energy.
Over the summer, while gas prices were soaring, a friend told me conspiratorially: "Do you know what the ideal price of oil is for the oil producers? A hundred, then thirty, then sixty." The high prices make enormous profits for the producers, then a decline shuts down public pressure for alternative energy, bankrupts the green entrepreneurs and keeps us guzzling oil. Then $60 a barrel doesn't seem bad at all.
How do we keep up the momentum for alternative energy? Some economists have suggested a gas price "floor" or a substantial gas tax - $1 a gallon or more - but this is not practical. A year of woeful tales about truckers, school districts, heating oil customers, airlines and others hammered by high oil prices would cause enormous public outcry.
