Long-Term Policies Needed to Address Energy Use and Price Volatility

GAO discussed the oil price increases that have taken place since Iraq's invasion of Kuwait. GAO noted that: (1) between August 1 and August 23, 1990, the price for oil futures increased from $21 per barrel to almost $32 per barrel before falling to about $27 on August 27; (2) retail gasoline prices increased about 10 cents a gallon after a major oil spill in March 1989; (3) retail home heating oil and propane prices increased 29 percent between November 1989 and January 1990, due to severe cold weather; (4) the increased oil prices affected the costs of many other industrial and agricultural products; and (5) U.S. dependence on the Organization of Petroleum Exporting Countries and the Persian Gulf nations will increase dramatically if the demand for oil imports continues to rise. GAO believes that: (1) the development of a national energy strategy is sorely needed and long overdue; and (2) actions are needed to encourage improvements in energy efficiency to reduce U.S. dependence on oil and its vulnerability to potential oil supply disruptions.