San Diego Union-Tribune (Sunday)
WHY AMERICANS BECAME MORE VULNERABLE TO OIL PRICE SPIKES
More than a decade ago, when Americans faced surging prices at the pump, policymakers developed a vision to wean people off gas and oil: more efficient cars, more compact and walkable communities, more renewable energy.
“We have a serious problem,” George W. Bush warned in his 2006 State of the Union address. “America is addicted to oil, which is often imported from unstable parts of the world.” It was a powerful statement for a Republican president with deep ties to the oil business.
His remarks — made as oil prices rose and eventually hit $100 a barrel for the first time in the country’s history — marked the start of several years of a remarkable bipartisan push to wean the nation off oil and gas and better insulate Americans from price shocks in the global oil market.
Officials drew up the first increase in fuel economy standards for cars and trucks in decades. National oil savings plans won broad support in Congress, to address energy dependency as well as the grave threat of climate change. Public transportation advocates launched “Dump the pump” days to urge commuters to take trains and buses.
Then the country lost momentum. A surge in oil and gas production at home, as well as a flood of cheap crude overseas, ushered in an era of lower energy prices. Ramping up supply, rather than reining in demand, came to define America’s push for energy independence.
Awash in fuel, Americans bought larger cars and homes that required more oil and gas to power them. Cities built more highways, public transportation use declined, and suburbs sprawled.
Yet the nation’s expansion of drilling over the past decade — which made the United States the world’s largest oil and gas producer — has ultimately made households vulnerable to volatile price swings. U.S. oil and gas companies say that they have no control over high prices at the pump, citing a confluence of global factors: the COVID pandemic, supply chain disruptions and Russia’s invasion of Ukraine.
Conservation has become a toxic concept in U.S. politics. Oil industry groups frame conserving energy as deprivation. With midterm elections looming, and Republicans using high gas prices to attack President Joe Biden’s policies, few Democrats have mentioned the idea of cutting back on use. Biden, who came to office promising bold action on climate change, has urged oil companies to step up production, although administration officials maintain the United States must make a transition away from fossil fuels in the long run.
“If you could convince Americans to conserve, that would probably have a much more dramatic, immediate impact on reducing price,” said Patrick De Haan, an oil analyst at Gasbuddy, a Boston-based company that operates apps and websites that help people see realtime fuel prices at gas stations across the United States.
“But asking Americans to consume less seems like a threat — many perceive that as a threat to their freedom in some way,” he said.
Biden’s climate agenda has tried to address some demand-side issues. The infrastructure bill he signed last year includes the largest investment in public transportation ever, with more than $100 billion for trains and buses over five years.
Still, the mindset was evident in the response to a 10point plan to cut oil use released by the International Energy Agency last month, which recommended measures such as implementing car-free Sundays in cities. The IEA contends that if advanced economies put its 10 recommendations into action, they could cut oil demand by 2.7 million barrels a day, on par with an expected global shortfall in Russian oil as buyers increasingly shun it.
“Energy watchdog issues draconian recommendations,” a Fortune article said. “Don’t plan on leaving the house on weekends.”
Some economists say that, on a macroeconomic scale, increased domestic energy production has insulated aspects of the United States’ economy from the worst effects of the crisis, for instance by creating more jobs and profit in the oil and gas sector. Compared to Western Europe, where there is little upside to an oil price shock because it produces far less oil, the effect on the United States, in “the aggregate, is more modest,” said Gian Maria Milesi-ferretti, senior fellow at the Hutchins Center on Fiscal and Monetary Policy of the Brookings Institution.
Still, that is little comfort to individual households, which are more reliant than ever on fuels whose prices rise and fall on global trends.
The United States has instead leaned on technology and efficiency improvements to keep energy use in check.
Between 1970 and 2018, the fuel economy of passenger vehicles on the road in the United States roughly doubled for both cars and light trucks, for example. And that trend is expected to accelerate as the Biden administration moves to reinstate stricter fuel economy standards, after an attempt by the Trump administration to roll them back. Transportation is by far the biggest user of petroleum, and the biggest contributor to climate change.
Several factors have blunted the effect of those improvements, however, said Eric Masanet, who researches emerging environmental technologies at the University of California, Santa Barbara. Americans are buying a lot more cars: From 1970 to 2018, the U.S. population rose by 54 percent, but combined car and truck registrations rose by 141 percent. And vehicle travel, in miles, has continued to rise, which is a major reason the United States uses more energy per passenger and distance traveled than other major countries, he said. Public transportation ridership, which had already been on a slow and steady decline since the middle of the 2010s, cratered during the pandemic.
And while all classes of vehicles have become more fuel efficient, the U.S. fleet has steadily shifted toward a mix dominated by larger and heavier vehicles such as pickup trucks, vans and SUVS, further slowing overall efficiency gains. The IEA recently estimated that the shift toward bigger vehicles had negated 40 percent of the fuel savings that would have occurred under the more stringent fuel economy rules.
“It’s been one step forward, one step back,” Masanet said.