The main reason for the decline in world oil prices is a decline in U.S. use of petroleum. The United States is importing less petroleum because Americans are driving less. Americans are driving less because employers have cut millions of jobs, and fewer Americans are driving to work.
There are other market forces involved, but it’s easy to pick out a connection between the job losses and the decline in gasoline prices. This also means that the world oil supply is a limiting factor on the U.S. economic recovery. The economic problems became a crisis because of the high price of energy. In essence, the economy ran out of steam because we couldn’t pay for all the gasoline.
If the economy halfway recovers, rising energy prices may prevent it from completing the recovery. But the good news is that even a half-hearted move away from oil may be enough to keep oil prices in check, at least for a few years. A 20-year transition to electric or hydrogen-burning vehicles, along with incremental improvements in other areas, might be fast enough.
It’s reason enough to make batteries and other power technology a bigger priority. We learned in the 1970s how severely energy can limit the economy. We now have the technology to overcome those limits. As Neil Young has been pointing out for months, there is no need to wait.