Message from a Wall Street gusher
A gusher with a message. Wall Street's sudden spurt in oil stocks was one more reminder of what many energy experts are warning: Despite OPEC's troubles, a future of plentiful oil at comfortable prices cannot be taken for granted.
Demand - and prices - will rise in relation to supply. Or so big buyers of oil shares seemed to say in one of those anticipatory signals by investors that are not always right but are always worth noting. The corollary is that momentum must not be lost for developing alternative sources and increasing energy efficiency.
To be sure, last week's rally in oil company stocks was attributed in part to end-of-quarter trading and immediate events, such as a cut in British oil prices less than was expected. Some analysts doubted the rally would last long.
But the fact remains that the outlook is already changing from previous predictions of continuing drops in OPEC prices and at the gasoline pump. In the United States there is considerable diversity. But in general there are signs that the bottom of the gas-price trough may have been reached. At the same time motorists are being socked with the new federal 5-cents-a-gallon tax, along with increases in some state taxes.
Are the signals sufficient to encourage prudence as energy use is predicted to rise while recession dwindles?
Business Week cites a chorus of ''influential voices'' warning that American complacency on energy could have dire economic and political consequences. Renewed heavy dependence on Mideast oil, for example, could lead to crisis if supplies are interrupted or prices steeply hiked.
Congress and the administration have a responsibility to keep up with the situation and ensure that government actions and policies are indeed prudent. For example, has it been wise to reduce federal impetus for conservation, solar energy, and synthetic fuels?
One example. At the Massachusetts Institute of Technology a recent conference dramatized how fast photovoltaics - the use of solar power for electricity - is moving. Despite the high cost per watt in relation to conventional energy, solar electricity is already economic for many uses in communications and third-world villages remote from central power. Some 60 companies are manufacturing photovoltaics in 20 countries. According to one study, European and Japanese competitors of US firms welcomed cutbacks in the US government's photovoltaics program while their governments, by contrast, were stepping up support. America's big lead in the industry is now said to be in jeopardy.
At the same time, the government still has funds available for support of synthetic fuels under the previous administration's energy program. While large companies have made publicized exits from synfuel projects, some smaller firms are still entering the field and taking advantage of government subsidy. Synfuels should not become boondoggles, but neither should they be allowed to languish, since they offer an alternative to oil in the uses that require its liquid form.
As for conservation, some buyers of oil stocks reason that it has played a small part compared to world recession in the decline of oil demand - and thus economic growth will quickly boost demand. In some uses it is argued that there remains little room for further conservation measures.
Still it appears that in the influential realm of attitudes American consumers have reached at least a plateau. A Louis Harris poll finds that families remain committed to holding down energy use even if energy prices fall. In the event of a drop of 10 percent to 20 percent, almost a quarter would use about the same amount of energy, between 30 and 35 percent would use more, and more than 35 percent would use less. Right on!
