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Will cheaper gas nix energy reforms?

If prices keep dropping, the next president may find it harder to ease the US off foreign oil.

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Low gasoline prices combined with the economic crisis "may lull candidates into a ... lack of immediacy of the [energy] problem," says a consumer marketing expert at Ohio State University in Columbus. "I hope that wouldn't happen because the fundamental nature of the problem is still the same as it was three weeks ago."

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Most troubling for presidential contenders John McCain and Barack Obama is that low gas prices have a more pragmatic and immediate effect on consumers and the broader market than any government policy. Both candidates aim to shift the United States onto domestic energy sources, including coal and nuclear, that can fuel new-generation electric hybrid cars costing as little as 2 cents a mile to operate as compared to 10 cents a mile for the basic gasoline-driven car.

"If prices stay at this level, will GM delay the Volt again? Will Nissan delay its electric car? Will Chrysler delay an electric car?" asks Mr. Bryce in Austin. "The arbitrage between gas and electricity isn't necessarily as important with gas at $2 as it is at $4."

Watching the recent gasoline price drops, former CIA director Jim Woolsey, now a McCain energy adviser, says he is reminded of similar price-cutting tactics by Saudi Arabia and OPEC in the 1980s and 1990s in the face of US government attempts to ease dependence on foreign oil. Both candidates' plans pose a significant strategic threat to oil producers, he says, because they focus on tax breaks for hybrid and plug-in vehicles that would gradually move consumers from liquid fuels onto the national power grid.

"I don't think oil could get down to $10, $20, or $30 [per barrel], but [oil producers] would be giving alternative fuels a difficult time with their ability to manipulate the market," says Mr. Woolsey. "But there is no way that the Saudis or any other oil producer can come close to competing with electricity."

Consumers may ultimately decide

Mr. McCain would provide a $5,000 credit for consumers who buy zero-emission cars and would provide tax incentives to companies to develop more nuclear plants and to help private firms develop a cost-feasible battery "to drive off the nukes," McCain energy adviser Douglas Holtz-Eakin told the Monitor this summer. "It's all about providing greater substitutes," he says.

Others question the candidates' promises to achieve energy independence while, essentially, taxing energy with new cap-and-trade programs on carbon emissions. Mr. Obama has said he wants to greenhouse gases cut by 80 percent below 1990 levels by 2050. McCain is shooting for a 60 percent reduction.

"These policies are wrongheaded in a real sense," says Ken Green, a policy analyst at the conservative American Heritage Institute in Washington. "If you want your society to evolve technologically and devote more resources to protecting the planet, the single best way to do that is to make the economy grow. If you create a market and demand for carbon reduction, the public will step up and buy them. The growth of these sectors is proof of that."

In the end, consumers – in their role as both drivers and voters – will ultimately be responsible for turning the key toward greater, if not complete, energy independence.

"These lower gasoline prices ... are a test," the Greenwood Commonwealth newspaper in Mississippi editorialized last week. "They are in part gauging whether Americans and other oil users will breathe more easily and forget about the importance of developing alternative fuels."

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