Remember last summer, when gas prices broke new records every day and the era of "energy independence" was on the horizon? Gas is half what it was then, but not for long. When OPEC's planned production cuts hit, tightening the global supply of oil just when economies are poised to resume growth, the world may well face the worst oil crunch in history.
The way to avert the brunt of that? It might not be pretty at first, but a price floor – a government-mandated minimum – on retail gas will buy us the time we need to wean us off the oil.
Oil's prognosis is grim for one reason: When prices are low, oil companies do not invest in new projects. That means we are draining global reserves without replacing spare capacity. From North Dakota to Kuwait, new projects that looked lucrative when every barrel fetched $147 got shelved when prices plunged. Many of these developments will resume when prices rebound but, because it takes years before oil from a new field reaches the market, it will be too late.
Cheap oil has been the engine driving US economic growth for decades; its evil twin is pricey oil and, given time, it will drive our economy over a cliff.
The effects of oil scarcity are by now well understood: soaring food prices, social unrest, geopolitical conflict – euphemisms for hunger, food riots, and war.
Last spring, hungry masses in Haiti, Bangladesh, Egypt, and other countries took to the streets, burning cars and looting stores over skyrocketing food prices. Consider it a preview of what's to come – abroad and here at home – if we do not leave oil before it leaves us.
During the summer of our discontent, pressure mounted to make long-overdue improvements to our national rail and inner city transit systems and to reengineer electric grids for wind energy. But the collapse of oil prices threatens to zap the political will to usher in the postcarbon era.
Surveys indicate that Americans who flocked to buses and trains this summer are getting back behind the wheel now that gas is a bargain again, and politicians who promised a clean energy future are now promising to build new highway lanes.
American voters and leaders need to act as though gas were still at $4 a gallon and put in place policies and spending priorities that will enable us to survive $5 or even $10 a gallon gas. We must work, play, eat, build, live, and legislate as though we will be scraping the bottom of the oil barrel in a decade.
With a growing world population that is ever more hungry for oil, it is just a matter of time before demand outstrips supply. The only sensible way to prepare for this is to stretch global reserves, making them last long enough to develop alternatives.
Oil may be in short supply, but ideas for how to wean ourselves from it are not. When oil prices were high, a cacophony of voices put forward a broad range of policy initiatives; some, such as reinstating the 55 mph speed limit, were sound; others, such as investing in ethanol, misguided. President Obama has at his disposal an experienced team of economic and environmental advisers who are more than capable of culling the best ideas.
Meanwhile, the one measure that should and could be instituted immediately is a floor for the retail price of gas. If, for example, the minimum were $4 a gallon and the market price was $2, the government would pocket the difference and find itself with billions to spend on mass transit.
Consumers will gripe, but they'll soon find solace in the reliable, affordable buses and trains they'll ride when gas prices soar beyond reach. For low-income individuals who would truly suffer as a result of such a policy, a payroll tax offset or refundable tax credit can ease the burden.
It's tempting to place energy security toward the middle of the nation's long to-do list. But delay presents immense risks. If the next oil crunch hits us while we're still down, all the bailouts in the world won't save us.
Erica Etelson is a journalist and the founder of the Berkeley Oil Independence Task Force.