No matter who's right, there's a growing sense that the era of cheap oil may be over. Even if the price of crude oil dips from its current level of $37 per barrel, strong demand from China, India, and the rest of booming Asia may keep a floor under prices. And the growing political volatility of the Middle East makes it more risky to assume that oil will flow as smoothly as it has over the past 20 years.
The U.S. needs a strategy to deal with the looming problems. Short run, the question is how to hold down oil use with minimum pain and maximum effectiveness. One necessary step is to increase fuel-economy standards for cars and sport-utility vehicles even if it means imposing more constraints on consumers. Another key policy: boost tax incentives for cars with hybrid engines offering much better mileage.
Longer term, the big issue is the lack of innovation in the energy sector. Research and development, both private and public, has faltered. An essential part of any forward-thinking policy is an increase in government funding for basic and early-stage applied research in such areas as solar power and fuel cells. There are more reasons than ever to cut the U.S. dependence on foreign oil. Now it's time to act.