Pump Shock and SUVs

To fill up a sport utility vehicle (SUV) at the pump these days takes an act of courage. Gasoline prices are back above $1.27 a gallon from a low of $0.96 a year ago. The higher cost of driving SUVs - which now number one out of five automobiles sold - has put a dark mood over America's love affair with the gas-guzzling road beasts. Since August, SUV sales have dipped four percent.

On that score, the OPEC cartel may be doing us all a favor. It has restricted its oil output since March, thus jacking the price of a barrel of oil up by 250 percent and forcing us to rethink our energy use. That ancient idea from the 1970s - conserving fossil fuels - has lost some of its popularity during this long economic boom.

This latest price wallop from the Organization of Petroleum Exporting Countries seems, however, less damaging than in the past. American businesses have become more energy-efficient. They now produce twice as much in goods and service per measure of energy as they did before the 1973 Arab oil embargo. And an oil price rise may be just what an overheated economy needs, as long as it doesn't kick-start inflation.

That's little solace for people facing higher heating bills this winter. But then many economists say these higher oil prices reflect the true cost of moving out of the fossil-fuel era toward developing renewable energies, most of which remain expensive.

We just wish that it wasn't a cartel forcing energy discipline on us. This kind of price-gouging, if done in the US, would land someone in court.

OPEC, by most economic theories, should have collapsed by now. Cartels tend to do that. Higher oil prices have lured other nations to drill eagerly for new supplies. But OPEC has kept competitors off-guard with the uncertainty of wide price fluctuations for a barrel of oil.

Should the US try to puncture OPEC's price balloon? Some analysts suggest that the US sell some of its Strategic Oil Reserves - that 560 million barrels of crude stored underground - to bring oil prices down. That's a dubious proposition, politically and economically.

No, oil consumers and OPEC have come to live with each other over the past quarter century. Consumers are winning this long battle - by conserving, by using other types of energy, and by buying nonOPEC oil.

OPEC is more and more on the defensive as many of its member states have become addicted to oil. One analyst likened OPEC to a tea bag - it only works when it's in hot water.

That's all the more reason to think twice before buying a SUV that often gets less than 20 miles to the gallon.

(c) Copyright 1999. The Christian Science Publishing Society

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