Embargo Against Iraq Rekindles Debate On US Energy Policy

THE tumult in the Middle East is reviving debate over energy policy in the United States. In California, Gov. George Deukmejian (R) calls for more offshore oil drilling to cut US dependence on Persian Gulf crude.

Natural gas, considered by some the Rodney Dangerfield of fossil fuels, receives new attention. The nuclear industry hopes there will be receptivity for a new generation of ``safe'' reactors.

Environmentalists say no thanks on the nukes and instead pine for more fuel-efficient BMWs and industrial boilers. All that's missing is talk of wind turbines and window caulking. But wait. ...

``There already was renewed interest in wind technology because of public awareness of the environment and concern about conventional sources of electricity,'' says Miles Barrett of Wintec Ltd., a California-based installer of wind machines. ``I think it is going to continue to rise.''

Behind much of the jockeying is concern about US dependence on foreign crude, particularly from the mercurial Middle East, a concern that was rising even before the Iraqi invasion of Kuwait.

Since the mid-1980s, when oil prices plummeted, domestic oil production has dropped to a 29-year low while US energy consumption has jumped dramatically. Result: The US now imports about 50 percent of its crude, most of it from the Organization of Petroleum Exporting Countries (OPEC).

Many analysts and politicians say the US can no longer afford, for economic and national security reasons, to be so reliant on OPEC - a point the Iraqi confrontation has just punctuated.

Despite the handwringing, though, many oil watchers doubt the latest flap in the Mideast will bring a significant shift in the US approach to energy use and production. Unless prices rise higher and stay high, these analysts argue, the US in not likely to dramatically alter its consumption, find new crude, or make a wholesale shift to alternative fuels.

``I think there will be a lot of talk about it,'' says Charles Ebinger, vice president of the International Resources Group, a consulting firm. ``I don't think it is going to have a lot of impact.''

Americans only respond to a sustained crisis, they contend, and there is still plenty of conflict between environmental and energy concerns that prevents a consensus in many areas. Moreover, not everyone agrees the US needs to do anything drastic.

Free-market advocates argue the largely hands-off approach the US has taken the past 10 years has functioned well. They maintain that, with the decontrol of energy prices, the market will correct itself: Consumption will drop and exploration and supplies will rise when prices surge.

Much of the interest in changing US energy policy revolves around the automobile. That's because transportation accounts for more than 60 percent of the oil consumed in the United States.

Automobile fuel-efficiency standards will likely receive closer scrutiny in the near future. A bill pending in the Senate would require automakers to build cars with a fleet average of 40 miles per gallon by the turn of the century. Cars now being sold average 27 m.p.g. The tighter standards have been opposed by automakers and the White House.

The measure will be taken up by lawmakers this fall. Proponents say such legislation could reduce carbon dioxide emissions and ease the threat of global warming. Now the move is also being sold as a way to conserve fuel. Will concern about energy security change its chances?

``That will be the first bellwether vote'' since the Mideast crisis, says Christopher Flavin of the Worldwatch Institute.

Some analysts have favored a massive increase in the gasoline tax (up to $1 a gallon) to induce people to change their driving habits. But such a move is opposed by consumer and transportation interests, among others, and the public outrage over the current run-up at the gasoline pump seems to ensure that such ideas will remain in the glove box.

Other less-popular ideas to reduce gasoline consumption include offering tax rebates to those who retire gas guzzlers and lowering the speed limit.

One effort likely to get a boost from the current energy ``shock'' is the push for alternative fuels. Vehicles powered with methanol, ethanol, natural gas, and electricity have already been gaining as a way to fight urban smog.

``There is an awful lot in common right now between the two imperatives of cleaning up the environment and reducing dependence on foreign oil,'' says Roger Gale, president of the Washington International Energy Group.

There are also plenty of places where energy and environment still collide, and the Gulf crisis may not change that much. There is agitation in the oil industry and among some lawmakers to revisit the issue of opening up the Alaska National Wildlife Refuge and some offshore areas to drilling. Companies would also like to gain greater access to public lands on shore. Yet few analysts - including some in the industry - expect changes on these issues soon.

Industry officials also don't expect the current increase in the price of oil to suddenly spur a large increase in domestic exploration.

``The prices are going to have to be stable for awhile before companies go out and start drilling again,'' says Joe Lastelic of the American Petroleum Institute.