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Beware Of Falling Oil Prices

Posted by Chris Berry on August 5, 2008 in Elections and Voting, Energy and Environmental Issues

Over the past couple of weeks, oil prices have been falling as rapidly as they climbed just a few months back. As I write this, oil is trading below $120.00 per barrel for the first time since early May, down nearly $30.00 from the all time high just a month ago. While we may all be breathing a collective sigh of relief, it’s not time to break out the bubbly yet. As painful as the sudden increase in the price of oil has been to our economy and to our family budgets, we cannot overlook the potential long-term benefits that will come from changing our consumption habits and increasing our use of alternative forms of energy.

Since the price of gasoline began approaching $4.00 per gallon, Americans have reduced the number of miles they drive, and they have moved away from trucks and SUVs in favor of more fuel efficient vehicles. These are positive steps, but we’ve seen it all happen before. Unfortunately, we tend to have very short memories. As soon as prices retreat to a more palatable level, we revert to our old ways almost as quickly as we abandoned them.

For the first time since the 1970’s congress is debating meaningful changes to our national energy policy. While partisan bickering will prevent us from ever developing an optimum strategy, at least there are substantive issues on the table beyond those favored by the petroleum and agriculture lobbies. The problem now is that unless we maintain the pressure on our elected officials to come up with a real solution to the problem, they are just as certain to revert to their old habits as the rest of us.

We may be past the short-term spike in prices, but nothing has happened to fundamentally alter the fact that global demand for energy will continue to outstrip supply. Even with a perfect plan in place, it’s going to take decades to replace our fossil fuel energy infrastructure. We should have responded to the first energy crisis of the 1970’s with a long-term strategy that focused on alternative fuels and energy independence. Instead, we squandered the opportunity. Thirty-five years have passed and we are more dependent on foreign oil than ever before. Regardless of what happens with the price of oil over the coming weeks and months, we must not allow ourselves to be distracted from the long-term problem. We can’t afford to waste another 35 years.

UPDATE

As of 10/30/08, the price of oil has fallen to $64.79, more than $82.00 below the all time high reached in July.

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