From: American Council for an Energy-Efficient Economy
Published September 28, 2004 10:09 AM

Oil Prices: A Warning Of Energy Storms On The Horizon

With oil prices spiking to almost a record $50 per barrel yesterday, the public has received another reminder of energy challenges confronting the United States. Pump prices for gasoline are again on the rise, heating oil prices are at record levels, and natural gas and electricity prices are poised to increase again. These price increases and the higher energy bills that result will put further pressure on the economy, imperiling the recovery. But individually at least, consumers have the power to protect their budgets from escalating prices by embracing energy-efficient measures and taking cost-cutting actions.

Drivers can reduce fuel use by inflating tires correctly, tuning up their vehicles, not driving too fast, and walking rather than driving on short trips, said Therese Langer, ACEEE Transportation Director.But fuel prices are likely to stay high, so longer term steps to cut gasoline consumption, like buying a fuel-efficient vehicle or living close to public transit, are important. When gas costs $2 a gallon, a car that gets 30 miles per gallon saves $400 a year over one that gets 20 miles per gallon.

Reducing consumption also helps bring down the price of gasoline, and the same is true in other energy markets. Current price increases result from demand for energy outstripping the ability of the energy producers to increase output. With U.S. natural gas and international oil markets producing at their limits, small changes in supply or demand, such as the recent hurricanes that pounded Gulf Coast producing platforms and refineries, can have dramatic impacts on prices.

In a study last fall, ACEEE found that a 2% reduction in natural gas consumption nationwide could reduce wholesale gas prices by 20% (see A little bit of savings can have big price impacts, said Anna Shipley, energy analyst with ACEEE's Industry Program.Natural gas markets are even tighter today than a year ago, because demand continues to grow while supplies are down. The National Petroleum Council's natural gas report last year said that the only option to re-balance natural gas markets in the next few years is to reduce consumption through energy efficiency. Similar conditions exist in the oil markets.

ACEEE calls on our nation's leaders to implement a forward-looking energy policy that recognizes the potential of energy efficiency to balance energy markets by reducing demand, a step that can lead to increased reliability and reduced energy prices.Investing now in energy efficiency would yield huge benefits for American consumers and our power system. By shaving peak demands for electricity, oil, and natural gas, we could reduce prices, make energy bills manageable, avoid costly disruptions, and put the American economy more firmly on the road to recovery, concluded Steven Nadel, ACEEE's Executive Director.It is past the time for the United States to make energy efficiency a top national priority.

ACEEE's Green Book®: The Environmental Guide to Cars and Trucks ( and the Consumer Guide to Home Energy Savings ( can help consumers make the most energy-efficient choices.

The American Council for an Energy-Efficient Economy is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting both economic prosperity and environmental protection. For information about ACEEE and its programs and publications, contact ACEEE, 1001 Connecticut Avenue, N.W., Suite 801, Washington, DC 20036-5525 or visit

For more information, contact:
Steve Nadel
Executive Director
American Council for an Energy-Efficient Economy

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