Retail gasoline prices in the U.S. fell for the sixth straight week in mid-November, dipping below $2.30 a gallon nationally for the first time since August. Under normal circumstances, such a steep decline in the cost of a vital commodity (down roughly 25% since September's peak) would be cause for celebration. Not now.
Indeed, hurricane season is almost over, but some key factors that contributed to America's recent sky-high energy prices -- a lack of resolve about conservation, inadequate refining capacity, and fast-growing power demand in China and India -- are still very much with us. So there's considerable danger that the current pricing respite could wrongly encourage U.S. consumers to revive spending on gas-guzzling sport-utility vehicles, turn up their thermostats a few degrees, and party like it's 1999.
That would be a big mistake, because those not-so-distant days of seemingly abundant energy at relatively cheap prices (in late 1999, gasoline was $1.28 a gallon) probably aren't coming back. There may be enough energy available to meet global needs for the next quarter-century, but we'll certainly have to pay up. In fact, the International Energy Agency (IEA) forecasts energy-producing nations will need to invest about $17 trillion over the next 25 years to meet a projected 50% jump in worldwide energy demand during that period. Since half that spending would be in developing countries, it's anybody's guess if all the needed investment will occur. If oil-exporting nations (consciously or unconsciously) underinvest in new capacity, shortages could send oil prices soaring. And because energy costs serve as a sort of tax on almost every commercial transaction, global growth likely would suffer as well.
But even if all that investment is made, we still might not like the consequences: The IEA predicts the share of global oil output from the volatile Mideast and North Africa would grow to 44% from about 35% today, because that's where the greatest opportunities to increase production lie. So much for "energy independence" for the U.S. and developed nations.
That's why policymakers and business must act while concern about energy security remains high enough to rally opinion behind meaningful conservation efforts (it's not just about buying a hybrid Prius, folks) or the need to allow new refineries to be built in someone's backyard, and the economy is strong enough to provide business with adequate capital to spend on energy-saving manufacturing processes and investment in alternative energy sources.
Such changes don't happen quickly. It took the federal government six years to reach the current level of generating 2.5% of its electric power from renewable sources like wind, solar, and biomass. (That's enough to power a city the size of El Paso for a year.) But the goal the feds announced this month to triple government's use of renewable sources by 2013 should be a wake-up call to private industry and average consumers that we must get serious about reducing our reliance on oil (much of it foreign) if "energy independence" is to be anything more than a flashy political catchphrase.
That's why it's best not to think of this year's high late-summer energy prices as the product of a short-term supply blip exacerbated by two freak hurricanes off the Gulf Coast. Instead, we should soberly remember those long, expensive months as a warning of what life could be like if we don't get serious about our energy future.