Decision Quality Blog

In the late ’70s, then-President Carter addressed the nation in what became known as the “national malaise” speech. The gist of it was, people are worried and don’t see any answers in sight. Washington was dysfunctional, the economy was stuck, and things weren’t going well in the middle-east. But the big bell ringer was an oil shock that left people reeling. Carter called for all sorts of bold moves and got shuffled back to Georgia at the next available election.

Fast forward 30 years and it’s no exercise in cynicism to wonder, “what’s changed?” A lengthy piece on American Energy policy in the New York Times pins the tail on the donkey: Oil prices have come unhinged, probably on a permanent basis. The American consumer is going to take it on the chin as will big chunks of American industry. While there may be a bit of roll-back from the current price, the long-term outlook is not good for cheap oil. As an exercise in public policy and decision making on a grand scale, American “energy policy” is a gigantic failure.

Ninety percent of Americans, meanwhile, expect the pain at the pump to pose a financial hardship in the next six months, according to a recent Associated Press-Yahoo News poll. Stocks now trade inversely to crude prices, and the Dow Jones industrials are in bear-market territory. Old icons have been written off, with Starbucks boasting nearly twice the market value of General Motors, which some on Wall Street say faces the possibility of bankruptcy.

Outside the thriving oil patch, it makes for a bleak economic picture. But it didn’t have to be this way.

Over the last 25 years, opportunities to head off the current crisis were ignored, missed or deliberately blocked, according to analysts, politicians and veterans of the oil and automobile industries. What’s more, for all the surprise at just how high oil prices have climbed, and fears for the future, this is one crisis we were warned about. Ever since the oil shortages of the 1970s, one report after another has cautioned against America’s oil addiction.

Even as politicians heatedly debate opening new regions to drilling, corralling energy speculators, or starting an Apollo-like effort to find renewable energy supplies, analysts say the real source of the problem is closer to home. In fact, it’s parked in our driveways.

Nearly 70 percent of the 21 million barrels of oil the United States consumes every day goes for transportation, with the bulk of that burned by individual drivers, according to the National Commission on Energy Policy, a bipartisan research group that advises Congress.

SO despite the fierce debate over what’s behind the recent spike in prices, no one differs on what’s really responsible for all that underlying demand here for black gold: the automobile, fueled not only by gasoline but also by Americans’ famous propensity for voracious consumption.

There will be lots of rhetoric between now and the general election, but no progress. Meanwhile, another anchor has been attached to the American economy and to public confidence.

Tags: Oil, energy, national malaise, Jimmy Carter, 1970s, renewable energy, decision making