Here is my summarized view of how we got into this mess: since I’m a believer in the power of incentives, I think the blame goes to the US Government.
Cheap energy in the 1980’s and 1990’s was a huge driver of the economic growth in the US during those decades. Our economy and lifestyle as a nation became dependent on cheap oil. As a result, the suburbs expanded and we severely under-invested in mass transit.
Because so much of our energy is imported, the economy is very sensitive to price increases. With oil priced at $140 a barrel, we are transferring a tremendous amount of our national wealth to oil exporting countries – most of whom hate us. Because of oil imports – and the trade deficit generally – we are experiencing a depreciating currency, inflation, and weak/no economic growth.
We got here because of a severe lack of leadership from the US Government. Gasoline never should have been so cheap because it incentivizes the wrong thing: relying on foreigners for 70% of our oil. For this reason alone – never mind the environmental reasons – we should have had high consumption taxes on gasoline.
Adjusting to the new reality will force many of the changes European countries have made years ago. The adjustment will be painful. It’s a shame we’re being forced to make them at gunpoint (and at great expense) rather than incentivizing people to conserve energy in the first place.