Enjoy Now, Pay Later

To everyone who has bitter memories of the oil shocks of the 1970s, when the Organization of Petroleum Exporting Countries drove oil prices to intolerable heights, today's bargain-basement values seem like sweet vengeance indeed. The U.S. has learned once again to love cheap energy, and why not? Gasoline and home-heating fuels are in plentiful supply. Inexpensive oil helped keep * inflation last year at its lowest level in 25 years, sent interest rates to nine-year troughs and aided in sustaining a four-year-old economic expansion.

But the thrill of cheap energy may prove perilously intoxicating. As U.S. energy consumption increases, imports are reaching alarming levels. At the same time, depressed oil prices have caused U.S. petroleum production and exploration to dwindle dangerously. This means, experts caution, that America is setting a time bomb. The scary possibility is that by the mid-1990s, as the U.S. becomes dependent on foreign oil for more and more of its consumption, OPEC could suddenly and steeply raise prices, throwing the economy into chaos. Warns Interior Secretary Donald Hodel: "OPEC is being placed back in the driver's seat. The U.S. is being set up for a majoroil-price shock."

Hodel is not the only Government official expressing concern. Next week the Department of Energy will release a 400-page report that will examine America'svulnerability to another major energy crisis. National Security Adviser Frank Carlucci will assess the possible security threat posed by a weakened U.S. petroleum industry. At stake also is the stability of Europe and the rest of the oil-consuming world. Since oil is traded in one global market, rising U.S. imports could create a worldwide crunch.

These days, though, tales of future shocks seem like distant fantasies. OPEC remains a cartel held together by the loosest of links. Three months ago the group agreed to cut production by 7%, to 15.8 million bbl. a day, and prices later jumped by about $4, to more than $19 per bbl. But OPEC's continued weakness soon surfaced. Last month certain members were reported to be cheating on the cartel's production accord, and prices fell below $15 per bbl. Even as Saudi Arabia worked last week to keep the production agreement intact, causing prices to rise about $2, to $18 per bbl., many traders doubted that the pact would ultimately stick. Few OPEC watchers believe that the cartel will be able to push prices higher than $20 per bbl. in the next two years.

Still, OPEC is expected to regain its strength sooner or later, and the U.S. is doing little to defend itself against a revitalized cartel. American oil production, which had held fairly steady since the late 1970s, declined last year. Total output fell by 3%, or 300,000 bbl. a day. The Department of Energy projects that U.S. oil production will fall by an additional 440,000 bbl. a day through 1987.

As domestic production faltered last year, imports rose by 900,000 bbl. a day, a 28% increase. The U.S. now depends on foreign producers for 38% of its supplies. In 1973, when oil prices surged in the wake of the Arab embargo against the U.S., Americans relied on foreign producers for 35% of their oil. As in the halcyon days of the 1960s, Americans believe they ought to be able to buy big cars if they feel like it or turn up the thermostat at every chill.