Why Americans Became More Vulnerable to Oil Price Spikes

More than a decade ago, policymakers came up with a plan to wean Americans off of gas and oil: more efficient cars, more compact communities, and more renewable energy.

In his 2006 State of the Union address, George W. Bush warned of America's dependence on oil from unstable parts of the world.

His remarks, made as oil prices rose and eventually hit $100 a barrel for the first time in the country's history, marked the start of several years of a remarkable bipartisan push to wean the nation off oil and gas.

The first increase in fuel economy standards for cars and trucks in decades was drawn up by officials. Congress supported national oil savings plans to address energy dependency and the threat of climate change. Public transportation advocates are urging commuters to take trains and buses.

The country lost steam. An era of lower energy prices was ushered in by a surge in oil and gas production at home and a flood of cheap crude overseas. America's push for energy independence was defined by ramping up supply rather than reining in demand.

Awash in fuel, Americans bought larger cars and homes that required more oil and gas to power them. The use of public transportation declined as cities built more highways.

The expansion of drilling over the past decade has made households vulnerable to price swings. American oil and gas companies say that they have no control over high prices at the pump because of a confluence of global factors.

Michael Greenstone is a professor of economics and director of the Energy Policy Institute at the University of Chicago.

Americans modify their behavior during periods of lower prices, buying bigger cars that use more gasoline.

The concept of conservativism has become toxic in American politics. The oil industry groups frame it as deprivation. Democrats have not mentioned the idea of cutting back on gas use as Republicans use high gas prices to attack President Biden's policies. Mr. Biden, who came to office promising bold action on climate change, has urged oil companies to step up production, though administration officials maintain the United States must make a transition away from fossil fuels in the long run.

Patrick De Haan, an oil analyst at GasBuddy, a Boston-based company that operates apps and websites that help people, said that if you could convince Americans to conserve, that would probably have a much more dramatic, immediate impact on reducing price.

He said that asking Americans to consume less seems like a threat to their freedom.

President Biden's climate agenda tried to address some demand-side issues. The largest investment in public transportation ever was included in the infrastructure bill he signed last year.

The response to the 10-point plan to cut oil use released by the International Energy Agency was indicative of the mind-set. According to the I.E.A., if advanced economies put its 10 recommendations into action, they could cut oil demand by over 2 million barrels a day.

The energy watchdog issues "drastic" recommendations, according to a Fortune article.

Increased domestic energy production has insulated the United States economy from the worst effects of the crisis, according to some economists. The effect of an oil price shock on the United States is more modest than in Western Europe.

That is not comforting to individual households, who are more reliant on fuels whose prices rise and fall on global trends.

Technology and efficiency improvements have been used to keep energy use in check.

The fuel economy of passenger vehicles on the road in the United States doubled between 1970 and 2018. The Biden administration is expected to restore stricter fuel economy standards after the Trump administration tried to roll them back. The biggest contributor to climate change is transportation.

Eric Masanet, a researcher at the University of California, Santa Barbara, said that several factors have blunted the effect of those improvements. The US population rose by 54 percent, but car and truck registration rose by 141 percent. The United States uses more energy per passenger and distance traveled than any other country due to the rise in vehicle travel. During the Pandemic, the decline in public transportation usage was so steep that it cratered.

All classes of vehicles have become more fuel efficient, but the U.S. fleet has shifted to a mix dominated by larger and heavier vehicles. 40 percent of the fuel savings that would have been achieved under the more stringent fuel economy rules were wiped out by the shift to bigger vehicles.

It has been one step forward, one step back.

It is similar to American homes. Direct energy use and carbon dioxide emissions have not risen as fast as the population because of improvements in space heating.

The gains have been offset by an increase in home sizes.

Average single- family homes built today are 50 percent larger than comparable homes built in the early 1970s, with house sizes growing rapidly for much of the 2010s before slowing over the past few years according to census data. American homes are among the largest in the world.

It can be difficult to measure sprawl, but there are indications it is growing. There are more new home starts in the edge of cities contributing to low-density urban development.

Standards of living for millions of Americans have been raised by some of these gains. A recent United Nations report notes that rich individuals have a high potential to use less energy and to reduce emissions of planet-warming gases. The report says that the world's richest 10 percent are responsible for 50 percent of greenhouse gas emissions.

Consumption by the wealthy is the cause of a large proportion of emissions in all countries, related to expenditures on such things as air travel, tourism, large private vehicles and large homes.

It concludes that by taking steps to reduce their total energy demand, like investment in public transportation, they could help cut emissions in key sectors by as much as 70 percent by the year 2050.

Felix Creutzig, a lead author of the U.N. report and chair of the sustainable economics at the Technische Universitt Berlin, said that it was a lot of potential.