How Lower Oil Prices Might Increase Demand The Senate brings up another bill aimed at lowering gas prices Tuesday, as Republicans tout a new slogan: "Find more. Use less." It's a paradox because finding more oil drives the price down, which encourages consumption. Efforts by Congress to lower gas prices may actually diminish incentives to lower oil consumption.
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How Lower Oil Prices Might Increase Demand

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How Lower Oil Prices Might Increase Demand

How Lower Oil Prices Might Increase Demand

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This is MORNING EDITION from NPR News. I'm Deborah Amos.


And I'm Steve Inskeep, good morning. Republicans in Congress use a new slogan to explain their energy policy. They say: Find more, use less. The find more part is where they differ with many Democrats, who tend to oppose more oil drilling for environmental reasons.

As a slogan, find more, use less is crisp, it's clear, and it may run straight into the problem that both parties face when it comes to energy. Lawmakers want to bring down energy prices. But when they increase supplies and prices go down in the short term, people tend to consume even more, which leads to trouble in the long term. NPR's David Welna explains.

DAVID WELNA: If you want a nice summation of how Republicans in Congress view their Democratic colleagues' resistance to opening up new areas to oil drilling, consider this gastronomical metaphor by Georgia GOP Senator Johnny Isakson.

Senator JOHNNY ISAKSON (Republican, Georgia): Quite frankly, in the United States of America, the Congress of the United States is sitting on a ham sandwich, starving to death.

WELNA: But if Tennessee Senator Lamar Alexander were to find that ham sandwich, he might still be starving if he stuck by the slogan find more, use less that he and other Republicans have been repeating.

Senator LAMAR ALEXANDER (Republican, Tennessee): We need to be finding ways that we can say yes, we can to finding more and using less.

WELNA: That might defy a prime role of the marketplace, which is that when you make something more available, its price falls, and people can buy more of it. Still, Texas Republican John Cornyn is touting the same line.

Senator JOHN CORNYN (Republican, Texas): We support the concept of using less, but we need to find more at the same time.

WELNA: How much more? Here's Ohio Republican Senator George Voinovich.

Senator GEORGE VOINOVICH (Republican, Ohio): Let's go after every single drop of oil that's available to us.

WELNA: If Voinovich didn't seem to get the memo about using less, neither did Senator John McCain. Here's his latest TV ad, bashing Democratic presidential rival Barack Obama.

(Soundbite of political advertisement)

(Soundbite of cheering)

Unidentified Announcer: Who can you thank for rising prices at the pump?

(Soundbite of cheering)

Unidentified Announcer: One man knows we must now drill more in America and rescue our family budgets. Don't hope for more energy, vote for it. McCain.

WELNA: In fact, it's actually the Senate Democrats who've been making the case for using less when it comes to oil. They have yet to explain, though, how their own proposals to bring down gas prices would encourage conservation. Here's majority leader Harry Reid.

Senator HARRY REID (Democrat, Nevada; Senate Majority Leader): We can't continue forever to consume 25 percent or more of the world's oil when we have less than three percent of the world's supply. It's just simple math.

WELNA: That much also seemed clear to President Bush, at least when oil was costing only half what it does today. The president advised Congress in January, 2006, that not all was well with the state of the union.

President GEORGE W. BUSH: And here we have a serious problem. America is addicted to oil.

WELNA: When Arizona Republican Senator John Kyl was reminded of that diagnosis by the president, he begged to differ.

Senator JOHN KYL (Republican, Arizona): I wouldn't characterize it as an addiction, but I would characterize it as a reality that in the foreseeable future, we're going to have to continue to use petroleum.

Ms. ANNA AURILIO (Lobbyist, Environment America): Oil is bad. We're addicted to it. We need to stop using so much of it. Finding more oil isn't going to help us use less.

WELNA: That's Anna Aurilio. She lobbies Congress for a fossil-fuel-free future on behalf of the research and advocacy group, Environment America. Aurilio says a more accurate slogan for Republicans to adopt would be find more, useless.

Ms. AURILIO: The last time we had a major change in energy policy that led to significant oil reductions was in 1975, after the OPEC oil embargo. That was the first time Congress put in place miles-per-gallon standards. Now we shouldn't have to wait for these price shocks to change our policies, but right now, we're in a price shock. So let's do it. Let's just go forward and do it.

WELNA: Even Republicans who advocate more oil drilling recognize that the rise in oil prices has an upside. Here's New Mexico's Pete Domenici, the ranking Republican on the Energy Committee.

Senator PETE DOMENICI (Republican, New Mexico): Something is bringing conservation to the mind and hearts of the American people, and we are beginning to use less. And I believe that's straight, pure cost.

WELNA: Daniel Yurgin of Cambridge Energy Research Associates agrees. Price, he says, is a powerful motivator for people to change their behavior, as long as that price is high enough.

Mr. DANIEL YURGIN (Cambridge Energy Research Associates): Last year, the U.S. actually had peak demand for gasoline, and U.S. gasoline demand is now actually declining. We've seen the first fuel-economy standards revision in 32 years. That wouldn't have happened if you didn't have price. And at the same time, it's provided a tremendous stimulus to alternatives to investment in new energy.

WELNA: President Bush made a remarkably similar observation last week at his White House news conference.

Pres. GEORGE W. BUSH: I mean, you know, it's interesting what the price of gasoline has done, is it caused people to drive less. That's why they want smaller cars. They want to conserve.

WELNA: So if you really want Americans to keep conserving or using less, would you also advocate finding more oil, which could have the effect of driving down prices by increasing supply? That's precisely what President Bush proposed doing last week, when he lifted his father's executive ban on exploring the U.S. outer continental shelf. And that's the paradox of find more, use less. David Welna, NPR News, The Capitol.

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