Climbing oil prices could cripple US economy
Legislative action must be taken by Congress to protect the US economy from climbing gasoline prices, the American Council for an Energy-Efficient Economy (ACEEE) has warned.Painfully high gasoline prices have so far failed to spur federal legislative action to address what ACEEE describes as an "increasingly long-term problem".
Although futures prices for both gasoline and crude oil fell on the NY Mercantile Exchange this week, they still remain at historically high levels. Crude futures prices are currently topping US $50 through 2009, suggesting that prices will soon reach double that of the past decade.
The Council has said that steps must be taken now to protect America's economy by reducing demand and national dependence on imported oil products.
The energy bill currently before the Energy and Commerce Committee contains two blunders that will help to drive up gasoline consumption over coming years, according to ACEEE: one provision makes the process of raising fuel economy standards more burdensome to regulators; and the other extends the counterproductive dual-fuel vehicle credit.
"Continuing to grant fuel economy credits for vehicles that use ethanol only on paper could cost 250,000 barrels of oil daily by 2012, while doing nothing to promote ethanol," ACEEE spokesperson Therese Langer explained.
She added that a bill introduced in the Senate supplements measure to save natural gas with an oil savings target of 1.75 million barrels per day by 2015.
"That's a laudable and ambitious oil savings goal, but unfortunately the proposed language contains neither a roadmap for getting there nor any enforcement mechanism," Ms Langer commented. "It will take a carefully crafted and energetically implemented package to get savings on that order, and all sectors of the economy will need to contribute."
Peak gasoline retail prices have been forecast at US $2.35 per gallon by this summer, and analysts have voiced concerns that these prices could dampen consumer spending and affect the economy as a whole.
According to ACEEE estimates, these increases in gasoline alone could reduce average national household disposable incomes by over US $1,000 compared to 2002, with a further reduction of US $1,600 from combined natural gas and electricity prices this year.
"What is needed is some political will to reduce energy demand before high prices do irreparable damage to the economy," executive director of ACEEE, Steve Nadel said. "It's time for members of Congress intent on beating back higher fuel economy standards to change their tune or offer a better approach."
By Jane Kettle