CRUDE OIL prices peaked at more than $100 a barrel last week, an unthinkable figure just three or four years ago - and this time the high prices will probably last indefinitely. That means $3.00 or more for a gallon of gasoline, and $3.20 or more for a gallon of heating oil. This doesn't have to mean the degradation of the American lifestyle, but it should mean the slow demise, at last, of the 4,000-pound family motor vehicle and the uninsulated house.
Because of economic growth, gasoline even at these high prices takes up less disposable income in the United States than it did in 1973 to 1974, the period of the first oil price shock. The economy is tolerating the pressure better, so far, than it did in the 1970s.
As always, poor people are affected the most. A 250-gallon tank of heating oil now costs $835 to refill, compared to $330 five years ago, when prices first began their climb. Governments have an obligation to help needy people endure energy cost spirals that are beyond their control. President Bush can help by releasing $586 million in emergency fuel-assistance funds that Congress has provided at his discretion.
In Massachusetts, the Legislature is deliberating on an energy conservation bill, which is mainly directed at electricity-producing utilities. The final version ought to contain some money to encourage insulation and other home energy conservation measures. Popular in the 1970s, these went out of fashion as energy prices declined in the mid-1980s.
Oil conservation is more a federal priority, and Congress and the president agreed on a plan last month that will raise the fuel efficiency standards for vehicles. The standards were stuck at the 1970s level, even though manufacturers discovered a huge loophole through which they devised minivans and sport utility vehicles. The new standards would apply to light trucks and mandate that the automakers' fleets achieve an average of 35 miles per gallon by 2020. It's not high enough, but it's a start.
This new buying trend is evocative of the 1970s and early '80s, when many Americans traded in their large cars. This time, however, American motorists are competing for gasoline with Chinese, Indians, and others in less developed nations who want the advantages of individual mobility. While crude oil prices edged back from their peak at the end of the week the long-term prospect does not portend a reprieve. Either Americans get frugal with energy or watch more of their income flow into the fuel tank.
