Long-term demand elasticities over the past three decades have proved noticeably higher than those evident in the short term. Indeed, gasoline consumption has declined markedly in the United States in recent weeks, presumably partly as a consequence of higher prices. *** Altering the magnitude and manner of energy consumption will significantly affect the path of the global economy over the long term.
For years, long-term prospects for oil and natural gas prices appeared benign. When choosing capital projects, businesses in the past could mostly look through short-run fluctuations in oil and natural gas prices, with an anticipation that moderate prices would prevail over the longer haul.