The Growth/Oil Hammer
I find the debate about whether or not we’re seeing “green shoots” to be a bit confused. Moreover, I don’t believe I can see the future. What I can see is the present, where markets react to any sign of good economic news with a big jump in oil prices. And the news in question is of the “things aren’t getting bad quite as quickly as we feared” genre of good news. What if six months ago, the economy is actually growing? Not growing rapidly. But just growing. Like, the number is above zero rather than below it.
Well it seems to me that we’ll be right back where we were in the summer of 2008 where sky-high gas prices were clobbering everything. And we haven’t really done anything over the past year to leave ourselves better-prepared for that situation.
Meanwhile, over the past six months the rising unemployment rate and falling asset values have been partially offset by the fact that thanks to energy price declines, real incomes for the employed majority have actually been rising. A spike in oil prices will put a stop to that and further hammer consumption. And the ensuing rise in inflation, though it’ll be non-core inflation, will probably make the Fed queasy about expansionary monetary policy.
Which is to say that if the recession ends, then it seems likely that we’ll slip right back into a new recession. I wish that weren’t the case, and that everyone would just react to an oil price spike by biking to work, but realistically we don’t seem to have made nearly the scale of adjustments that would be necessary to let the country shrug off a return to oil that costs over $4 a gallon.
45 Responses to “The Growth/Oil Hammer”
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May 30th, 2009 at 4:32 pm
I want trains and bike paths and better urban/suburban planning and I want to see our forces extricate themselves from foreign entanglements. I would like to see a highly qualified Hispanic woman sitting on the court and I want to see the Orlando Magic make it to the Finals.
I want to see many things.
But one thing I must see, in the next few years, is a total commitment, world-wide, to the electric automobile with the infrastructure to support it.
If I don’t see this, then I most definitely will see the world dissolve into chaos before my time is done.
Of this I have no doubt.
May 30th, 2009 at 4:39 pm
James Hamilton’s recent Brookings paper (”Causes & Consequences of the Oil Shock of 2007-08″) on the contribution of the rising oil price to the current recession bears on this.
May 30th, 2009 at 4:41 pm
I think the general relationship you point out is true: every time stocks or the economy (not identical, of course) go up a bit, oil prices go up, too. And, taken far enough, rising oil prices are the enemy of economic growth and health.
but it is not a linear relationship. we really did cut back on oil consumption during and for a time after the oil shock in the 70’s. we are cutting back now. every kwatt hour or btu saved is one step taken to protect the economy from the impact of high oil prices.
not everything america and americans are doing to cut oil demand will flip immediately to zero effect once people feel a little more comfortable. some of the oil-conserving policies, programs, and technologies of the last few years are for real and would not disappear overnight.
a LOT of small cars and hybrids have been bought, and more ordered. CAFE standards have been raised. the Stimulus package and other state and federal programs are insulating and caulking like crazy, cfl’s and now leds are spreading through the land, recycling (which probably saves more fossil fuel than anything else the average household can do)is now being instituted in virtually every major city or county. and so on. there have been the first steps taken to institute transit-oriented-development in a few regions. and so on.
all of which is to say, i think we have done a bit to leave ourselves better prepared. (i haven’t even mentioned that we got ourselves a new president and a Steven Chu and a few items like that which will count for quite a bit.)
i hope and think we are changing, even right this minute, into a very slightly smarter, less oil-addicted and coal-dependent society. it will take a while, but i don’t think this should be confused with it won’t get here at all.
May 30th, 2009 at 4:41 pm
Well so what? Aren’t you one of those anti-corporatist types that wants business to recede from our lives? You’re certainly anti-car. Did you think there was no consequence attached to restricting movement? $4.00 gas is right in your sweet spot, who cares if it affects other people?
No oil drilling, no new refineries, no gas, no problem. Let ‘em ride horses or walk.
May 30th, 2009 at 4:48 pm
The upside to high gas prices is, as others have pointed out, that people and businesses do find ways to make substitutions, which reduces future dependence on oil.
Better urban and energy planning policies under Obama may help – but then again they may not. Governments allocate resources inefficiently at lesat as often as they do so efficiently. Be careful what you wish for.
May 30th, 2009 at 5:02 pm
It’s odd the complete lack of discussion about the cost of oil as a factor in the recession. It’s as if it was an entirely external factor in the whole last 18 months.
May 30th, 2009 at 5:04 pm
The upside to high gas prices is, as others have pointed out, that people and businesses do find ways to make substitutions
Maybe, but mostly we just learn to do without. And that’s not good for our economic system.
May 30th, 2009 at 5:11 pm
I refuse to believe that our supremely efficient economy isn’t perfectly poised to ride every incoming wave, causing the rest of the world to tremble in awe of our maxi-brains.
May 30th, 2009 at 5:12 pm
Hasn’t it seriously affected the trends in gasoline pricing that demand has begun to decrease? I thought that the evidence showed a reverse in U.S. driving habits such that for the first time, miles driven and gasoline use were declining.
May 30th, 2009 at 5:16 pm
OPEC has several million barrels/day of production shut in currently. Last summer there really was a supply crunch where everyone was producing as much as they possibly could, but this is artificial now. They want the price to be high – say $75 a barrel – so they are cutting production to try to support or drive up the price. I think most of those countries see what happens when the price gets too high and will try to not let that happen again as long as it is something they can control. Almost every recession we’ve had for the last 40 years was preceded by a spike in oil prices. That was then followed by a period of very low oil prices. I think they would very much like to have things level off at $75/barrel, no higher no lower and not have huge swings in prices. If the price gets much above that, they will increase production to bring it back down.
Eventually there will be permanent supply problems but that is still some years off I think.
May 30th, 2009 at 5:18 pm
halfdan said: “It’s odd the complete lack of discussion about the cost of oil as a factor in the recession. It’s as if it was an entirely external factor in the whole last 18 months.
People do talk about high oil prices as one trigger for the sharp stock market decline, and for the mess the car industry wound up in (although no one would think oil prices were as critical to that mess as was the amazingly bad management at the car companies), and so on. But the reason oil prices are not made more of as a ’cause’ of the current recession is chiefly that they were not nearly so critical as other factors, such as the home price/mortgage bubble bursting, the evaporation of credit that resulted, and so on.
so, it is not that the relationship is undetected or unremarked-upon. it’s just that the scandalous, near-criminal damage done by our financial sector has been so dazzingly horrifying that nothing else compares.
but the oil-price-to-prosperity relationship is pretty well-known: cheap energy fuels economic growth, expensive energy tends to choke it. we really have to work like hell to get our energy from other sources than oil if we are ever to achieve economic or environmental security.
May 30th, 2009 at 5:18 pm
Cause, or effect? ‘Unemployed’ might as well mean ‘not commuting’.
May 30th, 2009 at 5:29 pm
Matt,
It does seem odd that you support policies that would raise the cost of energy, like the Waxman-Markley Climate bill, but complain when market forces do the same thing.
May 30th, 2009 at 5:30 pm
My neighborhood wants a $1,000,000 stimulus so we can buy three PodVans and have our groceries automatically delivered for the equivalent of 400 Miles per Gallon. We have about 2,000 people, so our average capital investment is about $500.
May 30th, 2009 at 5:32 pm
Max424, agree entirely with you assessment of transport infrastructure etc, but…
Are you saying that without personal motoring we cannot have a functioning society?
This is exactly the thinking that got us here in the first place, we need to look beyond the continuation and growth of personal motoring to something more sustainable.
May 30th, 2009 at 5:33 pm
It does seem odd that you support policies that would raise the cost of energy, like the Waxman-Markley Climate bill, but complain when market forces do the same thing.
One raises revenue for alternative energy development and infrastructure, the other pays dividends for oil companies.
May 30th, 2009 at 6:03 pm
I thought that the evidence showed a reverse in U.S. driving habits such that for the first time, miles driven and gasoline use were declining.
The declines have been very small — 2% at the outside. That gets swamped by the volatility of oil prices.
May 30th, 2009 at 6:05 pm
The contrast is even more stark. Higher (pre-tax) oil sends more money overseas and hurts our trade deficit. Higher (post-tax) oil lowers the pre-tax price and raises money for our government at the same time. Doing something constructive with the tax revenue varies with your politics, but there is nothing inconsistent about our host’s opinions (assuming he knows all this, which he most likely does).
May 30th, 2009 at 6:25 pm
It really bothers me that the United States can’t raise its gasoline tax, which I think is presently at 18.4 cents per gallon at the federal level. During the 2008 campaign, bothg McCain and Hillary Clinton proposed a gas-tax holiday for the summer of 2008. Obama got to look “reasonable” by correctly deriding the gas-tax holiday as a “gimmick”. I realize President Obama has inherited an economic mess, but I’m disappointed that (as far as I know) he’s not going to be raising the gas tax anytime soon. Some taxes are less harmful than others. We really need to reduce our dependence on foreign oil, and (per the blog post) the associated “price shocks”. Even a rise of 10 cents in the gas tax would slightly reduce miles driven and carbon burned. It’s a shame that looking at Washington today, it is as obvious as can be that a rise in the gas tax simply won’t happen anytime soon.
May 30th, 2009 at 6:42 pm
As rainman was saying, there is currently curtailed supply (OPEC holding back) of a few Million barrels per day, that should allow OPEC to keep the prive within range (probably $70-90), until the supply demand situation worsens substantially. We probably have a couple of years before that happens, this weeks price rise is mainly speculation. Unlike rainman, I don’t consider $75 oil expensive, not given the more difficult types of oil that is being developed now -almost all of the easy cheap stuff is gone (or is being pumped from depleting fields today). It takes much higher prices than had been the case prior to say late 2007, to generate significant investment in this new stuff. Of course the last several months have seen massive pullbacks in drilling activity. Restarting will be difficult, as all the laidoff oil workers will think twice about rejoining an industry that treats them as expendable. Expect a big crunch to come -but probably not for at least two years.
Democrats should be allowing some new domestic drilling. Not because it will produce enough new supply to matter -that is not possible, but because getting on the right side of the optics before the crunch hits, and the public starts looking for scapecoats will be politically important.
May 30th, 2009 at 7:18 pm
There was a bill in congress last year that would force the CFTC to regulate the International Commodities Exchange. The ICE was founded by Goldman-Sachs, Morgan,Stanley and others to trade commodity futures.
The bill was inspired by the fact that oil futures had increased 520% from 2001 even though production had kept pace with demand and inventories were steady. The CFTC, under Bush, had declined to impose position limlts on ICE speculators, even though that was their usual role. Dollar volume on the ICE had hugely increased, while physical volume was up only slightly.
The bill was not passed and congress adjourned. There has apparently been no action on the bill this congress. Obama recently nominated an ex Goldman-Sachs guy to head the CFTC.
The price of oil is up 80% from its lows despite a drop in demand and record inventories.
May 30th, 2009 at 7:19 pm
Re: What I can see is the present, where markets react to any sign of good economic news with a big jump in oil prices.
That big jump was not due to supply-anddemand factors. Supply remains plentiful and demand remains weak. No, the big banks, frustrated that they can’t make a quick buck anywhere else, are having a second go at commodities speculation, same as they did in the wake of the real estate meltdown. This time they won’t push prices anywhere near as high, and in fact this mini-bubble will begin deflating in July (you heard it here first).
Re: Well it seems to me that we’ll be right back where we were in the summer of 2008 where sky-high gas prices were clobbering everything.
I realize that Matt doesn’t have a car and probably has no idea what gas costs, but for the record I just paid 2.33 a gallon in Baltimore (not too far from DC). That’s a long way from where things were last summer.
Re: Are you saying that without personal motoring we cannot have a functioning society?
That’s pretty much true, yes. Even before cars there existed personal forms of transportation. They were called horses, occasionally hitched to buggies, carriages etc.
May 30th, 2009 at 7:25 pm
Folks interested in the Waxman-Markey bill should note that 85% of the permits will be given away for free. That’s right, free.
And, while I like the idea of electric cars, it’s just going to put pressure on current power producers using oil and gas. Do you folks think that’s a good thing? I don’t. Where is the call for nuclear?
Oh, and for the private car nazi above, I hope you get run over by a bus.
May 30th, 2009 at 7:54 pm
So it seems that we’re in the position where, if the economy is running well enough to not be in a recession, it will drive energy prices high enough to put us into a recession. It would seem, then, that the cycle of recessions and energy price spikes will just continue ad infinitum, and our standard of living will continue to ratchet downwards – until, that is, we change our energy use habits, which will require a pretty fundamental reorganization of our society.
That’s going to be hard to do, and will require a political consensus to really make those fundamental changes. Any bets on how long the “drill, baby, drill” crowd will take to be convinced that our current culture of SUVs and sprawl is compromising our standard of living? It may take a good many years of flailing against the dying of the light before they’re on board.
May 30th, 2009 at 7:58 pm
Re: Are you saying that without personal motoring we cannot have a functioning society?
That’s pretty much true, yes. Even before cars there existed personal forms of transportation. They were called horses, occasionally hitched to buggies, carriages etc.
Horses don’t have motors. And most people didn’t have horses – they lived in functioning neighborhoods where they could actually walk to the places they needed to go. Hard to imagine these days, I know…
May 30th, 2009 at 8:06 pm
Folks interested in the Waxman-Markey bill should note that 85% of the permits will be given away for free. That’s right, free.
We know. Because fucks like you water down the ideal bill so much because otherwise it won’t pass (or rather, fucks like Blue Dogs from coal districts, but close enough). Ideally none of the permits would be given away for free, but it’s better to enact that bill than not to.
And, while I like the idea of electric cars, it’s just going to put pressure on current power producers using oil and gas. Do you folks think that’s a good thing? I don’t.
Um, yes. That’s absolutely a good thing. How are you possibly going to get major oil companies to start diversifying into cleaner energy sources if not through pressure? Wait for the free market to do it? The point is that the timeframe that would take is unacceptable in terms of damage to the planet.
Where is the call for nuclear?
Good point. Shouldn’t that be what Republicans are calling for as a compromise? A rational opposition party would get something they think is good like that into the bill, instead of just making up numbers like “this will cost each family $3200 a year” and blathering about socialism and otherwise acting like children throwing a temper tantrum. So I guess we don’t get nuclear since anyone who would advocate for it is too busy doing that. Such are the perils of an unserious party.
May 30th, 2009 at 8:22 pm
The consequences of Peke Oil have been foretold for decades.
May 30th, 2009 at 8:48 pm
23,26: Don’t worry too much about plug-in and hybrid demand for electricity. Electric is much more efficient, and very little electricty is made from oil fired generators anymore. Switching electric gen away from oil was how we escaped the 70’s oil shocks. Now, we mainly have transportation, and portable fuels are a lot tougher to replace. The problem with the electric solution, is that it won’t be here in a big enough way soon enough. The only way to avoid the coming oil cruch, is to destroy the economy. We’ll just have to adapt as best we can, that is the consequence of ignoring it for too long.
Currently natural gas is suffering a glut, prices crashed much more than oil. This will prove a mixed blessing, as the new unconventional natural gas depletes frightening fast, and drilling has collapsed. I suspect natural gas is going to go through some nasty boom/bust cycles, we are probably only a couple of years away from the next boom (price spike).
May 30th, 2009 at 8:55 pm
I spent some time researching Chancey’s claim that we went through a period in which personal transportation by horse declined.
Here is the review I found. The article points out that personal horse riding was always limited in urban setting, but horses were very competitive in pulling street cars until the 1880s when electric overhead wiring was established for the electric street care.
From about 1880 to 1910, personal transportation was walking or taking the street car, a 30 year period of domination by the electric street car.
May 30th, 2009 at 10:04 pm
@15 Phil: “Are you saying that without personal motoring we cannot have a functioning society?”
Yes, I am. I wish it were otherwise but my wishes and reality have no relationship to each other. Not at this point in history.
Matt’s post is about the destructive nature of oil shocks to the US economy. If oil prices continue to rise, which is a logical expectation, we could and probably will experience either excruciatingly slow growth or a perpetual recession.
If oil prices suddenly rocket to the statosphere -say $10 a gallon gas by the year 2015- and stay there, which in my opinion is a real possibility, we could see a complete structural breakdown in the world’s economies and ensuing chaos.
If the US auto and truck fleet were completely electric, we knock out close to 50% of our oil needs, roughly the same amount of oil that this country imports. Needlessly to say, this would create a buffer that would allow us to grow regardless of oil prices and more importantly, survive a catastrophic oil shock.
I have commented on this blog many times that my most fervent wish is to ride on an American bullet train as it skims past majestic wind farms that feed into a an elaborate and efficient national smart grid.
Hopefully that bullet train will feed another train that will deposit me roughly in my neighborhood where I can either walk or ride my bike -safe from auto traffic- to my home.
But the first priority is to survive. The world’s auto fleet is going to continue to grow. That auto fleet must be predominantly electric, or we as a species will soon encounter unimaginable trouble.
May 30th, 2009 at 10:21 pm
Matt, you may want to google “peak oil” before making further posts on this subject.
May 31st, 2009 at 12:37 am
Well it seems to me that we’ll be right back where we were in the summer of 2008 where sky-high gas prices were clobbering everything. And we haven’t really done anything over the past year to leave ourselves better-prepared for that situation.
Welcome to the future. The time to do something to leave ourselves better prepared for this predictable and predicted state of affairs was decades ago. It’s really not a good idea to bet that humans are smarter than yeast.
May 31st, 2009 at 12:52 am
American Petroleum Institute holds conference calls with bloggers and never invites progressive bloggers.
http://netenergy.theoildrum.com/node/5445
Every time one of these API conference calls happens, I have to remark on how unbalanced the list of bloggers is with respect to a partisan political basis. I count 6 bloggers on the list who come from politically right wing blogs and 2 from moderate (read wishy-washy tilting right) political blogs. I count 0 from progressive political blogs. I don’t include TOD or the energy blogs in the count as they do mainly technical and not political blogging.
The righties and moderates will likely sit on any breaking information they get. Or they will easily get duped. Clearly the API anticipate this outcome and that seems to be why they stack the invitation list. It would be so obvious to get a knowledgeable progressive blogger such as Kevin Drum or Ezra Klein to participate. Matthew is also a good choice.
May 31st, 2009 at 1:57 am
Last night I watched -it was a replay from late April- Al Gore and John Warner testify before the House Energy and Commerce committee.
Almost every Republican Congressman’s question, regardless of topic, was met by Gore with lengthy diatribe against Big Oil. The congressman could ask about coral reefs or tree beetles and Gore would explain that the problem is; 13 years ago Big Oil commissioned a study of global warming and their scientists concluded that global warming was real and advancing at a potentially exponential rate.
The Republican Congressman would try to interject and say that his question had nothing to do with 13 years ago but Gore would put up a hand and interrupt and remind the lowly Congressman that complete answers are often complex.
Gore would then use up the rest of the Congressman’s 5 minutes by telling them in detail how the study was buried by Big Oil and then reworked by paid pseudo-scientists and why this cover-up constitutes the biggest fraud ever perpetuated in the history of mankind.
As the Democratic Chairman’s -Henry Waxman- gavel was pounding letting the Congressman know he was exceeding his time, even though he could not got a word in edgewise, Gore would conclude by saying that his sympathy went out to the Congressman for having been duped so easily by clowns and miscreants.
May 31st, 2009 at 4:08 am
btw: Gore also tentatively endorsed the idea of a Green Bank. He didn’t really know what it was, but the idea, what little he knew of it, seemed to hold some merit.
And I thought, what the fuck Gore, start reading the Yglesias blog! I do and as a result I am a Green Bank expert. I am just a lowly anonymous commentator and you are a Commander of the Universe and I know more than you do on how fund your plan for saving the goddamn planet!
Fucking Gore. Love ‘em. But the man need to bone up on his subject matter.
May 31st, 2009 at 7:33 am
At least it is going to be good for the new GM and Chrysler, and for Obama’s conservation/green power initiatives.
May 31st, 2009 at 7:40 am
Re: Horses don’t have motors. And most people didn’t have horses
The poor didn’t, true. But middle class and above did. And that was a lot of people. A century ago there were serious concerns that horse dung was going to render cities unlivable.
Why do you hate people being able to travel where they want, when they want? I really do not understand this sort of thing from the Left. I do understand that burning fossil fuels for transportation is something we’re going to have to stop doing eventually, and the sooner we have a viable replacement for this mode of powering transportation, the better. But the ability to travel ought to be seen as a basic right– and as empowering the iniduividual. Something the Left ought to be foot-stomping in favor of. Frankly the attitude that arises on these threads among the car-o-phobes (including from Matt) reminds me rather strongly of Fred Phelps and his “God hates fags” crusade. Something utterly irrational.
By the way, I live two and a half miles from my job, and whenever possible I ride my bike to work. Unlike Mixner of old I am not a apologist for our ridiculously designed suburbs where you can’t go anywhere without a car. But I am under no illusion that we are ever going to get rid of something like the personal automobile, however we end up powering it. At least, not unless we develop teleportation as an alternative. Wheeled vehicles go all the way back to the Sumerians. They will be with for a very long time to come too.
May 31st, 2009 at 8:42 am
Why do you hate people being able to travel where they want, when they want?
That’s not the reason to oppose protecting personal motoring at any cost. Oil energy is extremely valuable. However, it hasn’t been priced that way and the costs associated with burning that very valuable oil to essentially push around a 3,000 lb car to carry a ~180 lb person haven’t been accounted for until now. It’s a waste of energy. A huge waste of a non-renewable resource.
Even electric cars require energy. Electricity generation may be largely non-oil now, but when 200 million people plug in their electric cars instead of filling up at the pump, that’s going to require a huge addition of energy to the grid. Electricity that’s not generated currently.
But the ability to travel ought to be seen as a basic right
You have that right. Your own two feet or bike. The costs associated with any other kind of travel method need to be accounted for. And there are costs: roads are expensive and destroy ecosystems, suburban developments are inefficient and wasteful, fossil fuels contribute a significant portion of greenhouse gases. And the energy cost is enormous. Is pushing a SUV (or even a Civic) around the best use of a valuable natural resource simply because the full cost isn’t being accounted for?
Something utterly irrational.
Then you’re not paying attention to the argument.
May 31st, 2009 at 9:31 am
The crucial dynamic in market prices, commodities particularly but financial assets also, is the rapidly shrinking influence, importance and power of the US. Any analysis of markets must be divorced from a US centric starting point.
The run up in oil from $50 since mid April is perfectly coincident with the drop in the dollar index. For much of the rest of the world oil has not gone up in price at all. The same holds true with the broad range of other commodities in strong up trends.
There is outright glee in much of the world over these developments, or at least relief. Unseen by most a line has been crossed and the US will now be treated as a debtor nation should be.The great capital flows which have always worked in favor of the US for 60 years will now work against it.
In the very short term the dollar slide is likely to pause and reverse and that should probably coincide with a drop in commodities. If not, if the trends continue it will be terribly destabilizing.
Long term the dollar will strengthen only because of war, from the barrel of a gun. The economic fundamentals otherwise are overwhelmingly staked against the US. The Middle East wars were seen by the neocons as the final flowering of Americas absolute superiority. In truth they were a reaction to its waning power. As they drag on into functional defeats the urge is growing for new victories. American militarism is fundamentally a reactionary force, a sign of weakness and the rest of the world knows it now.
May 31st, 2009 at 9:59 am
Energy will determine our future.
Oil production will peak and decline, probably very soon. It may have already peaked.
Then why haven’t we invested in developing renewable energy alternatives? Relying on market adjustments to guide us through a transition past the oil economy seems foolish in the extreme.
I think we are fucked, well and truly fucked. I want to be living on arable land within the next 2 – 5 years.
May 31st, 2009 at 10:35 am
But the ability to travel ought to be seen as a basic right…
There is a difference between “access to water should be seen as a basic right” and “access to a lush green lawn and a swimming pool in Scottsdale should be seen as a basic right”.
I look forward to your accusations that I hate lawns. You will have seen my true anti-grassite nature for what it is.
May 31st, 2009 at 10:53 am
Poor people, who can’t afford cars?
People under 16, who can’t legally drive them?
Old or disabled people?
A car-dependent society screws these people.
Why do YOU hate people being able to go where they want, when they want?
May 31st, 2009 at 11:27 am
One big change since July 2008 is that we have now first passed over a carbon tax and now are in the process of having a cap and trade system that will not significantly impact energy prices until who knows when, thanks to Mr Waxman. Rebpulicanuts being even more off base is no excuse for Obama caving in on auctioing off 100% of emission permits.
May 31st, 2009 at 1:33 pm
Oil provides 38% of the worlds energy.
The production of conventional oil peaked in 2005.
The production of all hydrocarbon liquids peaked in 2008.
I can’t see how the economy can really rebound until we can replace fossil fuels with renewables.
June 6th, 2009 at 10:04 am
[...] Matthew Yglesias writes: … if the recession ends, then it seems likely that we’ll slip right back into a new recession. I wish that weren’t the case, and that everyone would just react to an oil price spike by biking to work, but realistically we don’t seem to have made nearly the scale of adjustments that would be necessary to let the country shrug off a return to oil that costs over $4 a gallon. SOURCE [...]