U.S. chalks up large energy savings

Press, 26 August 1980, Page 16

U.S. chalks up large energy savings

By

DAVID LASCELLES

in the “Financial Tinies,” London

To read the carping criticisms from Europe about the way the United States wastes energy, one might easily think the Americans had done little to help solve the world energy crisis. Nothing could be further from the truth, and the sooner people realise it the better.

Not only has the United States achieved a quite astonishing turnaround in energy consumption in the past 12 months, it has also beaten the very bounds of political feasibility in so doing. Added to that, the prospects for further improvement are very strong. And unless this message is absorbed abroad, America is likely to get increasingly irritated by the self-satisfied noises emanat-

ing from countries which have achieved far less, but which delude themselves that they are setting an example. I could bombard you with figures showing that the United States has not only slashed energy consumption by a quite astonishing amount, but has actually managed to increase its oil production in the first half of this year (something the sceptics said it could never do). But I’ll spare you the dry .details. All you need to know is the bottom line: United States crude oil imports are down 14 per cent on last year, and America’s dependence on imported oil has fallen from 45 per cent to 40 per cent. This is a remark-

able achievement which ranks — in terms of the volume of oil involved — on a par with Britain’s move into oil self-sufficiency. But unlike Britain, whose contribution to the world oil market will now level off, the United States will in all likelihood save as much again by the mid-1980s. Ah, you may say, but this is all freakish because the United States is in recession. What happens when demand picks up again next year?

This is a clever but irrelevant argument. The rise in domestic production has nothing to do with the recession; If anything, energy demand has been unseasonably high this northern summer because of the appalling heat wave and the

need for air conditioning in the past two months. Fur* thermore, United States oil prices are now being deregulated, and higher prices will continue to find their way through to the domestic market for a year or more, even if the world oil price weakens a bit. So . the pressure for conservation will persist, and by next year more Americans than ever before will be driving small cars.

Instead of harping on United States wastjfulness, the other industrialised countries should be heaving deep sighs of relief that the United States did not succumb to the strong temptation earlier this year to freeze oil prices again as a quick fix for inflation. It would have been so easy. Energy was the most dynamic component of the

consumer price index, and it could have been annihilated at a stroke. Credi* for strong-mindedness over this must go to President Carter who still has executive authority over oil prices. The quick fix solution is not dead, of course. Mr Carter, or his successor could still re-control oil prices in the next 12 months. But the United States leadership’s perception of the energy problem has become quite sophisticated, and few people, be they Republicans or Democrats, in Congress or the White House, are seriously proposing re-control. Rather the opposite. Prominent politicians all advocate higher energy prices, whether by accelerating decontrol (as demanded by Mr Ronald Reagan,) the Republican candidate) or slapping a colossal tax on gasoline (ad-

vocated by Mr John Anderson. the Independent candidate). In fact, Mr Carter has come under fire for not pushing energy prices up even faster. But. worthy though demands for a 50 cents a gallon gasoline tax may- sound, Mr Carter demonstrated quite conclusively a couple of months back that it is futile to expect either Congress or the public to accept something like that in election year. His proposal for a mere 10 cent tax was booted out. So let there be no more snide remarks about monstrous -ars and houses shimmering in the haze of their own wasted heat No wonder the United States has suffered a drought this summer, it’s all that hot air blowing in from abroad.