Will Cheap Gas Diminish Conservation?

You can almost hear the cheering at the nation’s gas pumps these days as prices continue to drop. The cheers have replaced the groans of the past five years as gasoline prices escalated to record highs for motorists in the United States. In Virginia, those prices topped $4 a gallon of regular and briefly flirted with $5 a gallon.

News from the crude oil markets in the past week has been good. While oil prices sank to below $34 a barrel on Friday, gasoline prices dropped to their lowest levels in five years. The national figure was $1.66 per gallon of regular. The low price here was $1.55 for the most part, although some stations could have been selling it for less than that.

So the economic law of supply and demand is still working. The supply of oil is outpacing demand with the result that prices have dropped.

And despite cuts in oil production by OPEC, the foreign oil cartel, prices of crude remain low. OPEC officials announced last week they had agreed to slash 2.2 million barrels from its daily production — its largest single cut ever. At the same time, Russia and Azerbaijan, countries that are not members of OPEC, said they were cutting their oil production by nearly 1 million barrels a day.

But crude prices continued to drop, a sign that investors are more worried about the worldwide recession in which energy use will continue to erode.

Will oil and gasoline prices remain at those lower levels?

They will if American consumers continue to show the same appetite for conservation as they once showed for gas-guzzling cars and trucks. During the height of the rise in oil prices, consumers switched to the more fuel-efficient hybrid vehicles that Detroit has been so reluctant to produce.

Consumers also learned to conserve gasoline by combining their shopping trips and postponing longer trips. Last summer’s vacations were reduced from long drives to the beach or other parts of the country to day trips that didn’t consume as much fuel.

Many Americans have also learned to turn their thermostats up in the summer time and down in the winter. Sweaters are far less expensive than heat provided by electricity or fuel oil.

The nation, then, over the past four years has shown it can conserve energy. Businesses and individuals did it for the same reason — to preserve the cash in their pockets. And alternative energy sources have also reduced the nation’s demand for foreign oil.

But will those conservation efforts continue? The jury is still out on that. Analysts watching the beleaguered auto industry say that sales of trucks, the industry’s big-ticket item, are up slightly as gas prices have fallen.

That’s bad news for the conservation effort. “If there’s one thing that Americans can be reliably counted on to do, it’s buy big vehicles when gas gets cheap,” said Aaron Bragman, an analyst with IHS Global Insight. “It’s what they’ve always done.”

More disconcerting for conservation advocates are the hybrids that are sitting longer and longer on dealer lots. Toyota’s Prius, the top-selling hybrid on the market for the past several years, saw its sales tumble 48 percent in November compared with the same month a year ago. Sales of other hybrids have also dropped in recent months because the cheaper gas outweighs the extra cost.

Foreign oil reached record high prices of nearly $150 a barrel less than a year ago. That captured the nation’s attention to the extent that most folks became serious about conserving gasoline and other forms of energy.

The drop in oil prices to less than $40 a barrel has been good for consumers trying to stretch their dollars as far as they can. But let’s not allow those lower prices to diminish efforts toward energy conservation.

The foreign oil cartel is discovering it is not as firmly in charge as it thought it was. Let’s keep it that way.