01:00 AM EDT on Monday, October 11, 2004

Can the United States kick the oil habit? A new study says that it can.

It may ultimately have little choice, with Venezuelan President Hugo Chavez saying that oil could fairly soon cost as much as $100 a barrel.

But high oil prices have a silver lining: They encourage oil-consumption efficiency. This was a lesson of the Arab oil embargo of the 1970s, which led to increased fuel-efficiency -- which paid off, at least for a while, in increased economic growth and reduced dependence on oil imports. By the mid-1908s, the '70s oil-price surge had led to a 17-percent decline in oil consumption and a 50-percent drop in imports, while gross domestic product grew by 27 percent.

Unfortunately, though, it wasn't a lesson that we retained. Imported oil now accounts for about 56 percent of U.S. consumption -- up from about 35 percent in the mid-'80s. Lowering that percentage would greatly improve national security, largely because much oil comes from such unstable places as Venezuela, the Mideast and Africa.

It would also improve the resilience of the U.S. economy, since oil costs affect the cost of just about everything else. On top of that, there's global climate change.

The new study, conducted by the Colorado-based Rocky Mountain Institute (funded partly by the Defense Department), suggests that we respond to high oil prices by retooling for alternative energy sources and by more efficiently using oil. Entitled "Winning the Oil Endgame: American Innovation for Profits, Jobs and Security," the study's report says that in two decades we can halve our fossil-fuel use, through such alternatives as biofuels and hydrogen. The report even asserts that by 2050 the United States can be oil-free, save for some oil used as fuel to produce hydrogen.

That's way down the road, but many of the positive effects on national security and the economy would occur much sooner.

Amory Lovins, the Rocky Mountain Institute's director, was an alternative-energy guru in the oil-embargo days. Now he promotes carbon fiber for the bodies of "ultralight" cars, which could get 85 miles a gallon and still be safe. To start the ball rolling, he proposes a "feebate": a subsidy for fuel-efficient cars, raised from a tax on gasoline guzzlers.

The Pentagon is interested because it is the world's biggest oil buyer. A little efficiency goes a long way in the defense budget. Military planners also think that fuel-efficiency could make the military more effective, as well as removing oil as a source of global conflicts. Says Mr. Lovins: "Imagine, too, our moral clarity if other nations no longer assume everything the United States does is about oil."

High oil prices cause hardship. But this report should help us focus on their related opportunities.