By Nathan Willcox
As
the fallout from Hurricanes Katrina and Rita ratchets up what were
already high gas prices, energy prices are once again making the news.
And while most news stories have focused on the pain felt by
Pennsylvanians at the pump, it's no secret that the state's business
community stands to take quite a hit from today's high gas prices as
well.
The
good news is that we can turn things around - if we recognize our
energy problems for what they are and work together to solve them.
First,
we need to recognize that while Katrina and Rita have resulted in
record spikes in gas prices and dire predictions for heating costs,
prices were already on their way up as a result of rapidly increasing
demand for oil bumping up against limits in the world's ability to
supply it.
While
Americans were able to slash our consumption of oil by nearly 20
percent between 1978 and 1983, our oil consumption has since increased
by nearly one-third and is now well above seven billion barrels per
year. At the same time, demand from developing nations such as China
has skyrocketed, eating up the world's remaining spare capacity to
produce oil. This year's hurricane season merely added salt to the
wound.
Even
after the damage from Katrina and Rita is repaired, the underlying
dynamics of supply and demand will likely keep prices high and
jeopardize our energy security. Even ExxonMobil and the International
Energy Agency now acknowledge that oil supplies from non-OPEC nations
will likely peak by the end of this decade - leaving us even more
reliant on dangerous and unstable parts of the world for our energy
supplies.
The
impact on the business community is significant. Trucking companies
paying higher fuel costs, retailers facing a less prosperous holiday
shopping season, and other businesses watching transportation and
shipping costs take a larger chunk out of their profits all stand to
lose big from higher oil prices.
To
protect our economy by lowering oil and gas prices, we need to decrease
our oil demand - specifically through changes in our transportation
sector, which is the biggest and fastest-growing source of demand.
Unfortunately,
it's looking doubtful that the federal government will save the day
anytime soon. The only way to solve the problem is to enact state-level
policies now that will prompt increased efficiency and conservation in
Pennsylvania.
PennEnvironment's
September report "Making Sense of America's Oil Needs" proposes several
options Pennsylvania's decisionmakers could take to reduce our
consumption of oil in the months and years ahead. Policies that provide
dedicated funding for mass transportation systems, incentives for
carpooling and public education for drivers about simple ways to make
cars go farther on a gallon of gas can ease the growth in demand in the
near term and save consumers money.
In
the medium and longer term, new state policies should spur the
production of hybrid-electric and other advanced technology cars, slow
the growth of sprawling developments that drive increased vehicle
travel, and improve and expand our mass-transportation systems to run
more efficiently and reach even more Pennsylvanians. And of course,
there could be a requirement that new cars and trucks go farther on a
gallon of gas by increasing the federal corporate average fuel economy
(CAFE) standard to 40 miles per gallon.
Decisionmakers
also need to be wary of "quick fixes" that don't address our state's
real energy problems. Eliminating gas taxes and relaxing air-pollution
standards - ideas that have been mentioned by some in Harrisburg and
Washington - would not necessarily lower prices for consumers, but
would almost definitely threaten the financial stability of state
government and the health of our environment.
It
may be hard for some in the business community to accept the need for
government action to deal with our energy crisis. But the alternative -
market-driven energy price spikes resulting in dramatic drops in
consumer purchases - is even more painful to contemplate.
PennEnvironment
urges Pennsylvania's business leaders to contact their elected
officials in Harrisburg and urge them to push for these policies to
help curb our appetite for oil. By doing so, we can bolster the
long-term energy - and economic - security of the commonwealth and the
nation.
