Energy expert: U.S. gasoline use may have peaked

By Brian Tumulty • Washington Bureau • June 25, 2008

WASHINGTON -- Gasoline use in the United States appears to have peaked last year, and the worldwide increase in demand for oil is slowing, Pulitzer Prize winning author and energy expert Daniel Yergin told a Senate-House panel Wednesday.
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Worldwide demand for oil will grow by about 900,000 barrels a day this year, down from its recent rate of 1 million barrels a day, Yergin testified.

Although Yergin did not predict whether the recent peak price of $139 a barrel for oil would be broken, he said the current run-up in prices has created a "break point"' that is slowing demand.

"Pressure on markets, the impact on consumers and on the economy, the shifts at hand, tell us that a break point is at hand," said Yergin, chairman of Cambridge Energy Research Associates. "Markets cannot go up forever. We're already seeing a response."

Yergin and other experts told the Senate panel the United States needs to take a balanced approach combining improvements in energy efficiency and increases in energy production to address the long-term challenge of coping with high energy costs.

"We've doubled energy efficiency over the last 30 years," Yergin said. "I think it is a reasonable goal to double it again."

John Laitner, director of economic analysis for the American Council for an Energy-Efficient Economy, suggested Congress order each federal agency to develop an energy efficiency plan, provide money to help pay for the retirement of gas guzzling cars and trucks, and enact legislation to encourage telecommuting and video conferencing.

As it is, the message is not getting through to federal agencies. Laitner said he quit his previous job at the Environmental Protection Agency because he had a supervisor who frowned on employees' working at home and insisted they come into the office.

On another front, the federal Energy Information Administration released a forecast Wednesday with encouraging news — an inflation-adjusted decrease in worldwide oil prices through 2015 because new production is anticipated in Azerbaijan, Brazil, Canada, Kazakhstan and the United States from both traditional sources and through alternative energy production.

But the agency's annual outlook for international energy production and use had a bleaker long-term forecast for a continuing rise in prices between 2015 and 2030, predicting worldwide energy consumption would increase by 57 percent from 2004 to 2030.

Wednesday's Senate-House hearing by the Joint Economic Committee marked the 11th congressional panel to discuss the ongoing energy crisis this month and the 40th since the beginning of the year, said Chairman Sen. Chuck Schumer, D-N.Y.

With gas prices topping $4 a gallon and retailers beginning to pass along the higher cost of energy on store shelves, Congress has been under pressure to come up with solutions to ease the price crunch.

But partisan bickering has crippled many proposals because many Republicans want to emphasize increased oil production measures such as opening the Artic National Wildlife Refuge to drilling and construction of nuclear power plans while most Democrats want to focus on imposing a windfall profits tax on oil companies and legislation requiring energy conservation and alternative energy production.

Schumer suggested what's needed is "a grand compromise" between members of the two parties such as the one he suggested 10 years ago in which some Democrats would agree to open ANWR to drilling if some Republicans would agree to higher fuel efficiency standards for motor vehicles.

"Frankly, I don't think this administration can pull it off," Schumer said, suggesting that Congress may have to wait for President Barack Obama or President John McCain to strike such a deal.

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