Even though oil prices are falling, keep conserving
Tuesday, October 7, 2008 11:09 AM PDT
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E-mail this articleOct. 7 Daily News editorial
The huge financial rescue package Congress approved Friday apparently did little to reassure Wall Street, much less main street. The Dow Jones industrials, down 800 points at one time during Monday trading, closed with a 370-point loss. But there was one bit of welcome economic news to start the week. Oil prices fell below $90 a barrel Monday, for the first time in eight months. Since peaking in June, oil prices have plunged more than 40 percent.
The tumbling price of oil is partly due to the slumping financial markets. Victor Shum, an energy analyst with Purvin & Gertz in Singapore, told Associated Press writer Alex Kennedy that the drop in oil prices over the weekend was due to speculation that the U.S. financial crisis will envelop Europe, leading to a global economic slowdown and cut in demand for crude oil.
Another development exerting downward pressure on oil prices has been a steady decline in gasoline consumption. As gas prices rose, eventually topping $4 a gallon, Americans began driving less. In June, motorists drove 12.2 billion fewer miles than in the same month the previous year, according to the Federal Highway Administration. June driving in Washington was down 6.8 percent from June the previous year.
High gas prices have led a large number of Americans to change their transportation habits. In an AARP telephone survey of citizens age 50 and older released last week, 67 percent of the respondents said they were driving less because of the high cost of gas. Forty percent said they’ve been using public transit, walking or bicycling since gas prices had risen. These are behavioral changes worth sustaining.
The overall decline in gas consumption has been significant. The highway administration reports that Americans consumed 400 million fewer gallons of gasoline and 318 million fewer gallons of diesel in the first quarter of 2008 than in the same period in 2007. The benefits of this conservation go beyond the lower energy prices that result from less demand. Highway fatalities are down. There’s less pollution in our cities and, of course, less dependence on foreign oil.
We should enjoy Monday’s rare bit of good economic news. The slump in demand that occasions this drop in oil prices is temporary. World energy demand is expected to grow 50 percent over the next two decades, according the federal Energy Information Administration. The EIA predicts that we’ll see oil prices climb as high as $186 a barrel in the years ahead. This is reason to continue conserving even as gas prices decline along with demand in weeks and month ahead. Reducing consumption is one way, perhaps the only way, that Americans can lessen the impact of high energy costs. It should be a national goal, particularly in difficult economic times.
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