Oil prices and security of supply

High oil prices brought some fundamental changes in petroleum markets that will prevent sudden price increases in the 1980s, barring a major supply withdrawal for political reasons. A 26% increase by non-OPEC producers is diversifying supplies, while deregulation has stimulated exploration and production and has encouraged dramatic conservation efforts in the US. Demand reduction lags behind price increases, but accelerates as price increases continue. Evidence of US success in improving energy efficiency is seen in the improved ratio of incremental Gross National Product and energy consumption. The result is an excess of world oil production capacity and the expectation that world oil prices will keep a closer match with the general inflation rate. Supply security, however, will remain an unsolved problem until importing countries have the option not to buy from politically and militarily unstable producers. This can be accomplished by developing North Sea, continental shelf, and other small fields if taxes levied against the petroleum industry are favorable toward development. 2 figures. (DCK)