Good times slow moves toward energy independence

ANALYSIS

By WALTER R. MEARS

With plenty of gas to fill it up, and prices at the pump going down, the once-urgent quest for U.S. energy independence isn't getting so much as an afterthought.

Oil imports are up, well past 50 percent of total consumption -- a level once set by Congress as America's peril point.

And nearly 20 points higher than 25 years ago, when the Arab oil embargo threw the American economy into turmoil, sent prices soaring and made lines at the gas station a national headache.

But as imports and consumption both went up in 1997, so did industry oil inventories, increasing to about 1 billion barrels, the American Petroleum Institute reported.

With prices down by about 5 percent, that was good business.

Raising inventories in government reserves, to provide insurance against interruptions in foreign oil supplies, was part of the policy push prompted by the energy crises of 1973 and the late 1970s. The other was to curb the appetite for imports by promoting conservation and energy efficiency. The market hasn't done that; indeed, the increased flow of petroleum for gasoline has done the opposite.

By the numbers, according to the API, petroleum imports went up 4.4 percent during 1998, to 55 percent of U.S. oil use.

More than half the increase in imports went into industry inventories rather than to immediate consumption.

Ironically, since Richard Nixon declared in 1973 that the United States should produce and conserve its way to self-sufficiency by 1980 -- he called it Project Independent -- reliance on imported oil has been increasing instead.

The 55 mph national speed limit was imposed as a conservation step after the 1973 Arab oil embargo. It was repealed late in 1995.

At the time of the Nixon-era energy crisis, imports accounted for about 35 percent of U.S. consumption. By 1977, imports were past 40 percent, prices soared, fueling inflation, and Jimmy Carter had his energy crisis; he said it would take the moral equivalent of war to deal with it.

Not that conservation efforts didn't register. Steps including automobile mileage requirements, an increasing use of natural gas, new technologies and other measures that began with the oil crunches have changed the mix.

According to the Energy Department, the United States is now 30 percent more energy efficient than 25 years ago.

Still, when the crises eased, business went back to usual. In 1990, Congress did vote to declare that 50 percent dependence on imported oil would be the peril point for U.S. national security.

In 1994, imports exceeded half of U.S. use for the first time.

Energy Department projections show imports could reach 60 percent by 2010.

By industry account, technological advances and political changes have created new sources overseas and reduced the potential of another disruption in Middle Eastern supplies. More than half of U.S. oil imports are from Venezuela, Mexico and Canada; some 20 percent come from the Middle East.

And with times good, supplies ample and prices down about 8 percent over the past year, energy conservation policy is a footnote, if that, on the political agenda now.

That's not without risk.

Disruptions in world oil markets and energy price shocks have been factors in the last three economic recessions.

Now the energy markets are helping boost the economy. "U.S. crude oil and petroleum prices generally began 1998 as they had ended 1997, in a continuing decline brought on by world production growth outstripping demand," the Energy Department said in its latest market report.

It's a mark of better times that the strategic petroleum reserve created in 1975 to cushion market disruptions hasn't had oil added since 1994. Since then, oil from the emergency reserve has been sold twice to reduce budget deficits, and once, on President Clinton's order, in a 1996 attempt to stem a sharp increase in gasoline prices.

There could be a different kind of pressure for conservation and reduced consumption -- the international agreement to combat global warming. It would take both to meet the U.S. pledge to reduce fuel emissions to 7 percent below 1990 levels by 2012, should that deal be ratified. Republican opponents say it would jeopardize the U.S. economy.

As usual, oil and politics will be a combustible mixture.

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Walter R. Mears, vice president and columnist for The Associated Press, has reported on Washington and national politics for more than 30 years.