Word: petroleum
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...everyone who has bitter memories of the oil shocks of the 1970s, when the Organization of Petroleum Exporting Countries drove oil prices to intolerable heights, today's bargain-basement values seem like sweet vengeance indeed. The U.S. has learned once again to love cheap energy, and why not? Gasoline and home-heating fuels are in plentiful supply. Inexpensive oil helped keep * inflation last year at its lowest level in 25 years, sent interest rates to nine-year troughs and aided in sustaining a four-year-old economic expansion...
...thrill of cheap energy may prove perilously intoxicating. As U.S. energy consumption increases, imports are reaching alarming levels. At the same time, depressed oil prices have caused U.S. petroleum production and exploration to dwindle dangerously. This means, experts caution, that America is setting a time bomb. The scary possibility is that by the mid-1990s, as the U.S. becomes dependent on foreign oil for more and more of its consumption, OPEC could suddenly and steeply raise prices, throwing the economy into chaos. Warns Interior Secretary Donald Hodel: "OPEC is being placed back in the driver's seat...
Hodel is not the only Government official expressing concern. Next week the Department of Energy will release a 400-page report that will examine America'svulnerability to another major energy crisis. National Security Adviser Frank Carlucci will assess the possible security threat posed by a weakened U.S. petroleum industry. At stake also is the stability of Europe and the rest of the oil-consuming world. Since oil is traded in one global market, rising U.S. imports could create a worldwide crunch...
When the glut is gone, OPEC will be a formidable force again. Predicts Dallas Energy Consultant Ed Vetter: "Once the OPEC countries got us backed into a corner, they could raise their price with impunity and we would have no way to respond." A recent report by the National Petroleum Council, an industry group that advises the Department of Energy, asserts that by 1990 OPEC will be producing at 80% of its capacity, as compared with 66% today. Historically, whenever OPEC has reached the 80% threshold, it has succeeded in imposing -- and sustaining -- oil-price hikes. The report estimates that...
...course, since energy forecasting is often as accurate as gazing into a crystal ball, the National Petroleum Council report could turn out to be wrong. A more optimistic outlook is offered by the Energy Information Administration, a division of the Department of Energy. It estimates that oil will sell for less than $20 per bbl. for the next five years and that not until the year 2000 will the U.S. be dependent on foreign supplies for about 55% of its consumption...