Scoop

Correction Appended

JUST three years ago, with oil trading at a seemingly frothy $66 a barrel, David J. O’Reilly made what many experts considered a risky bet. Outmaneuvering Chinese bidders and ignoring critics who said he overpaid, Mr. O’Reilly, the chief executive of Chevron, forked over $18 billion to buy Unocal, a giant whose riches date back to oil fields made famous in the film “There Will Be Blood.”

For Chevron, the deal proved to be a movie-worthy gusher, helping its profits to soar. And while he has warned about tightening energy supplies for years and looks prescient for buying Unocal, even Mr. O’Reilly says that he still can’t get his head around current oil prices, which closed above $145 a barrel on Thursday, a record.

“We can see how you can get to $100,” he says. “At $140, I just don’t know how to explain it. We’re surprised.”

For the rest of the country, the feeling is more like shock. As gasoline prices climb beyond $4 a gallon, Americans are rethinking what they drive and how and where they live. Entire industries are reeling — airlines and automakers most prominent among them — and gas prices have emerged as an important issue in the presidential campaign.

Ninety percent of Americans, meanwhile, expect the pain at the pump to pose a financial hardship in the next six months, according to a recent Associated Press-Yahoo News poll. Stocks now trade inversely to crude prices, and the Dow Jones industrials are in bear-market territory. Old icons have been written off, with Starbucks boasting nearly twice the market value of General Motors, which some on Wall Street say faces the possibility of bankruptcy.

Outside the thriving oil patch, it makes for a bleak economic picture. But it didn’t have to be this way.

Over the last 25 years, opportunities to head off the current crisis were ignored, missed or deliberately blocked, according to analysts, politicians and veterans of the oil and automobile industries. What’s more, for all the surprise at just how high oil prices have climbed, and fears for the future, this is one crisis we were warned about. Ever since the oil shortages of the 1970s, one report after another has cautioned against America’s oil addiction.

Even as politicians heatedly debate opening new regions to drilling, corralling energy speculators, or starting an Apollo-like effort to find renewable energy supplies, analysts say the real source of the problem is closer to home. In fact, it’s parked in our driveways.

Nearly 70 percent of the 21 million barrels of oil the United States consumes every day goes for transportation, with the bulk of that burned by individual drivers, according to the National Commission on Energy Policy, a bipartisan research group that advises Congress.

SO despite the fierce debate over what’s behind the recent spike in prices, no one differs on what’s really responsible for all that underlying demand here for black gold: the automobile, fueled not only by gasoline but also by Americans’ famous propensity for voracious consumption.

To be sure, the American appetite for crude oil is only one reason for the recent price surge. But the country’s dependence on imported oil has only kept growing in recent years, undermining the trade balance and putting an added strain on global supplies.

Although the road to $4 gasoline and increased oil dependence has been paved in places like Detroit, Houston and Riyadh, it runs through Washington as well, where policy makers have let the problem make lengthy pit stops.

“Much of what we’re seeing today could have been prevented or ameliorated had we chosen to act differently,” says Pete V. Domenici, the ranking Republican member of the Senate Energy and Natural Resources Committee and a 36-year veteran of the Senate. “It was a bipartisan failure to act.”

Mike Jackson, the chief executive of AutoNation, the country’s biggest automobile retailer, is even more blunt. “It was totally preventable,” he says, anger creeping into his affable car-salesman’s pitch.

The speed at which gas prices are climbing is forcing a seismic change in long-held American habits, from car-buying to commuting. Last week, Ford Motor reported that S.U.V. sales were down 55 percent from a year ago, while demand for its full-size F-series pickup, a gas guzzler that was the country’s best-selling vehicle for 26 consecutive years, is off 40 percent. The only Ford model to show a sales increase was the midsized Fusion. A Ford spokeswoman says the market shift is “totally unprecedented and faster than anything we’ve ever seen.”

If the latest rise in oil prices isn’t just another spike — like those of the 1970s and 1980s — but is instead a fundamental repricing of the commodity responsible for much of modern American life, the impact of that change will affect everyone from home builders and homeowners in exurbs to corporate leaders, landlords and commuters in cities.

Although Asian consumers have begun emulating America’s love affair with the automobile, with the commercial booms of China and India playing pivotal roles in increased oil demand, the largest energy appetite in the world is still found in the United States. Home to only 4 percent of the world’s population, the nation slurps up about a quarter of the planet’s oil — and Americans’ daily use is nearly twice the combined consumption of the Chinese and Indians, according to an annual energy survey published by BP, the British oil giant.

Indeed, low-priced gasoline has long been part of the American social contract, according to Newt Gingrich, the former House speaker and Republican leader. While in office, Mr. Gingrich battled efforts to modulate demand through tools like increased gas taxes and tighter fuel standards, and he argues that voters won’t support such measures even now.

“They will work if you coerce the entire system and if you pretend the American people are Japanese and Europeans,” Mr. Gingrich says. “Our culture favors driving long distances in powerful vehicles and the car as a social expression.”

Perhaps, but on Capitol Hill, members of both parties now say they are furious with Detroit for fighting so hard, and for so long, against higher fuel-efficiency standards.

Though analysts say automakers who shoveled out highly profitable and highly inefficient road hogs like S.U.V.’s and pickups deserve much of the blame, they also criticize legislators who failed to provide an incentive for consumers to switch to fuel-sipping cars. Some politicians are quick to acknowledge the problem.

“We’ve got to fix it or our standard of living will change within a decade,” says Senator Domenici, who is retiring this year. “Oil was too damn cheap, it’s too high now and it’s going even higher. I hope I’m wrong, but the problem is, we can’t catch up soon enough.”

According to energy policy experts, it was in the late 1980s and early 1990s — during the administrations of President George H. W. Bush and Bill Clinton — that things began to go wrong.

Before that point, the country reaped the benefits of the first fuel-economy standards, passed in 1975, known as corporate average fuel economy, or CAFE. Between 1974 and 1989, the efficiency of a typical car sold in the United States almost doubled, to 27.5 miles per gallon from 13.8.

LARGELY as a result, oil consumption in 1990 totaled 16.9 million barrels per day, basically on a par with the 17 million barrels per day consumed in 1980, even as the economy grew substantially. Oil prices were in the middle of a long downward slide that would take them from well above $30 a barrel in 1980 to a low of just under $10 in late 1998 and early 1999, interrupted only by brief spike in 1990 after Iraq’s invasion of Kuwait.

In 1990, Richard H. Bryan, a Nevada Democrat, teamed up in the Senate with Slade Gorton, Republican of Washington, and proposed lifting fuel standards again over the next decade, with a goal of 40 m.p.g. for cars. Amid furious opposition from Detroit, liberal Democrats from automaking states, like Carl Levin of Michigan, joined conservative Republicans like Jesse Helms of North Carolina, who died on Friday, to block new CAFE standards. “It was one of the most frustrating issues in my Senate career,” says Mr. Gorton, who left the Senate in 2001.

Dan Becker, then a lobbyist for the Sierra Club, still remembers his shock when he saw Mr. Levin and Mr. Helms, diametrically opposed on most issues, walk amiably together onto the Senate floor to cast their votes. “This wasn’t East-West, right-left, or North-South,” he says. “But had we passed that bill, we’d be using three million barrels less oil a day now.”

That amount may not sound like much, given total global consumption of 85 million barrels a day, but it’s more than OPEC’s spare capacity now.

Mr. Levin didn’t return calls for comment. But Representative John D. Dingell, the powerful Democrat from Detroit who chairs the House Energy and Commerce Committee, argues — as he did more than a decade ago — that tightening CAFE standards unfairly penalizes domestic automakers while rewarding foreign rivals who make more small cars.

Mr. Dingell, who has defended the automakers fiercely during his 52 years on Capitol Hill, decided to support the stronger CAFE standards last year. But he does not apologize for his longtime stance. “The American auto industry has sold the cars people wanted,” he says. “You’re going to blame the auto industry for that or the American consumer? He likes it sitting in his driveway, he likes it big, he likes it safe.”

A much more effective approach would be to simply raise taxes on gasoline, Mr. Dingell says, because higher prices are the easiest way to change buying habits. Some Europeans agree with this, noting that policy changes engineered through taxation can alter consumer choices without impeding economic growth.

Consumers overseas might not like higher taxes on gasoline, but they’ve adapted, says Jeroen van der Veer, chief executive of Royal Dutch Shell, the European energy giant. “A society can work, can function and can grow even at higher fuel prices,” he says. “It’s a way of life — you get used to it.”

In Mr. van der Veer’s native Holland, for example, gasoline sells for more than $10 a gallon, with $5.57 of that going to taxes. Even in Britain, which has substantial North Sea production, gasoline sells for $8.71 a gallon.

A SUBSTANTIAL gas tax increase was considered during the administration of the first President Bush, recalls William K. Reilly, who ran the Environmental Protection Agency at the time. But it was whittled down in 1990 to just 5 cents after Mr. Gingrich and other conservatives in the Republican Party broke with the president.

“This was a stark lesson and people decided the gas tax was the third rail of public policy,” Mr. Reilly says.

Even as Congress idled when it came to tightening CAFE standards or substantially raising levies on gas, the Exxon Valdez oil spill in 1989 made offshore drilling yet another unpalatable option. “That caused a sea change and after that no one had any sympathy for the oil industry,” Mr. Becker says.

In 1990, three months before the effort to raise fuel-efficiency standards failed on Capitol Hill, President Bush issued an executive order making large swaths of the continental shelf off-limits to new exploration. That policy remains in effect today.

When Senators Charles E. Schumer, a New York Democrat, and Frank H. Murkowski, an Alaska Republican, attempted to put together a grand bargain of opening up more of Alaska in exchange for raising auto efficiency in 1998, the two couldn’t persuade enough members of either party to go along.

“It was a no-action policy,” says Lee R. Raymond, the former chief executive of Exxon Mobil, who has had a ringside seat for most of the energy policy debates of the last 25 years. “By the time there is panic, people need to realize this: There is no quick-fix on this. By the time you panic, it is way too late.”

Still, many analysts argue that increased drilling alone is no panacea. They note that many of the oil giants don’t drill in areas to which they already have access. Exxon, in particular, has been criticized as spending too much to buy back its own stock and not enough on exploration. Chris Welberry, a spokesman for Exxon Mobil, defends the company’s record, saying, “We are investing in our business at record levels — around $25 billion this year.”

In any event, added drilling is unlikely to generate sharply lower prices. A recent study by the federal government’s Energy Information Administration estimated that under the best-case scenario opening up the Arctic National Wildlife Refuge would reduce prices by $1.44 a barrel by 2027. Drilling in broader swaths off the continental United States wouldn’t affect prices until 2030.

On the taxation frontier, President Clinton did manage to get through a small tax increase on gasoline — 4.3 cents — in 1993, but with oil prices hovering between $10 and $20 a barrel for most of the 1990s, conservation ended up on the back burner.

Indeed, President Clinton did propose a broader tax on energy consumption in 1993, but it died quickly when Senate Democrats rebelled, much as House Republicans derailed President Bush’s gas tax in 1990. Still, environmentalists like Mr. Becker remain disappointed with Mr. Clinton for not doing more in his first term when oil prices were low and Detroit was enjoying a recovery in profits after the lean years of the early 1990s.

Congressional Republicans made matters worse in 1995, when they attached a rider to a huge appropriations bill forbidding the National Highway Traffic Safety Administration from spending any money to raise fuel standards. That law, in effect until 2001, made any change in CAFE standards impossible, says Representative Edward J. Markey, a Massachusetts Democrat who has pushed for better fuel efficiency.

As Paul Bledsoe, strategy director of the National Commission on Energy Policy, recalls it, “The 1990s were something of a lost decade for American fuel efficiency.” With oil prices low, consumers began snapping up pickup trucks and sport utility vehicles, which were governed by less stringent fuel economy standards, thanks to a loophole in the original 1975 law. These carried higher sticker prices and profit margins, and both Detroit and foreign automakers were happy to oblige.

Although oil prices remained low through the 1990s, consumption patterns were taking an ominous turn. By 2000, daily demand reached 19.7 million barrels a day — nearly three million more than in 1990, a 17 percent jump in 10 years that wiped out much of the fuel savings that followed the energy crises of the 1970s.

Since then, global consumption has taken off, rising to 85.2 million barrels a day last year from 76.3 million in 2000.

In recent years, Mr. Reilly says that both the White House and Congress have passed up opportunities to call for higher gas taxes and fuel standards in the name of national security, especially after the Sept. 11 attacks. “We could have, but we didn’t,” says Mr. Reilly, who describes himself as a moderate Republican. “It’s part of a long pattern in which Democrats and Republicans have not wanted to wade into this issue.”

BY 2001, oil prices were slowly creeping up, but few seemed to notice, perhaps because the march was slow and steady. By 2004, crude was at $37 a barrel and the next year it hit $50. With higher prices for oil, an increase in gas taxes was political poison, but Mr. Markey says support for new fuel standards was reawakening.

Nevertheless, his efforts to pass new fuel economy legislation in 2001, 2003, and 2005 went nowhere amid continued opposition by supporters of the auto industry on both sides of the aisle as well as many conservative Republicans. Although the United States had long ceased to be energy-independent — that era ended just after World War II — Mr. Markey says he believes the memory of plentiful domestic supplies created a different mind-set here than in Europe, where oil was generally scarce.

Other veterans of those battles cite lobbying by the domestic automakers as a main factor in the failure of Mr. Markey’s legislation. “The auto companies didn’t see the handwriting on the wall,” Mr. Schumer says. “The auto companies would go to people and say, ‘If you vote for CAFE standards, the auto plant in your district could shut down.’ They got the message.”

Representative Mike Castle, a Delaware Republican whose district includes plants owned by G.M. and Chrysler, adds that “nothing was ever said directly but it would go through the minds of members that Detroit might respond.”

“Sometimes, things don’t have to be said,” he added.

Susan M. Cischke, group vice president for sustainability, environment and safety engineering at Ford, says the recollections of Mr. Schumer and Mr. Castle are “way over the top — you don’t just pull up or put down auto plants.” Instead, she says, when lobbying on CAFE, “we talked with our friends and indicated what it did with jobs. You want support.”

Oil industry insiders say they remained on the sidelines during Congressional debates over CAFE standards, although legislators from oil states tended to vote against more rigorous rules.

In 2007, with oil at $82 and gas nearing $3, Congress finally approved the first big increase in fuel-efficiency standards in 32 years, requiring the fleet average to reach 35 m.p.g. by 2020. That will save one million barrels a day by 2020, but onetime CAFE opponents like Mr. Castle now say they wish that Congress had acted sooner. Since the 1980s, fuel efficiency has flatlined at 24 m.p.g., while vehicle weight has jumped more than 25 percent and horsepower has nearly doubled. In Europe, on the other hand, fuel efficiency currently stands at 44 m.p.g. and is slated to hit 48 m.p.g. by 2012.

“It’s a shame we’re doing this now instead of 10 or 20 years ago,” says Mr. Castle, who supported the legislation last year. “It was always my hope they would just do it without a mandate.” He adds that while he still opposes drilling in Alaska, “Republicans aren’t all wrong when they talk about increasing supplies of oil. There are opportunities in the Gulf of Mexico.”

Senator Domenici, the senior New Mexico Republican, agrees that it’s time to look at new supplies but is even more critical of Detroit. “They all said to us: ‘Don’t change CAFE. It’ll come when it’s supposed to.’ That’s baloney,” he said.

UNTIL last year’s vote, Mr. Domenici was an opponent of new fuel-efficiency standards, a stance he now regards as a mistake. “We were like everybody else,” he says. “We should have been more active on CAFE sooner.”

With Detroit again seeing profits collapse as sales of big cars plunge, Mr. Domenici says he is worried about the survival of the domestic automakers.

“They talked a good research game,” he says. “But let’s face it, little was being done. They are suffering the consequences and could go broke just like the airlines.”

What Congress didn’t or couldn’t do, the free market is now doing in the form of higher gas prices: forcing Americans into more fuel-efficient cars. Ms. Cischke of Ford says that in the last two months, “We have seen more of a shift in the market than in 20 years of CAFE. People are buying what they need.”

Unfortunately, the shift is happening too fast for a company of Ford’s size. That is among the reasons Wall Street expects Ford to lose more than $2 billion this year.

Congress, meanwhile, in its bid to explain the run-up in fuel prices, is examining the role of speculation and the increased flow of investor money into commodities. Most energy economists emphasize the fundamental issue of supply and demand, rather than market manipulation, but financial factors like the weak dollar are also exacerbating the situation. Stephen P. A. Brown, director of energy economics and microeconomic policy analysis at the Federal Reserve Bank of Dallas, estimates that a little more than 20 percent of the price of oil today can be attributed to the dollar’s fall against the euro and other currencies.

Another financial factor behind the price rise that hasn’t been talked about much on Capitol Hill or elsewhere is reduced hedging by oil companies on futures markets, says Larry Goldstein, a longtime energy analyst. In the past, crude producers would offer buyers a portion of their energy output in future years in order to protect themselves if prices pulled back. But energy companies got burned as prices kept rising during the last two years and have since cut back on selling untapped production — forcing prices for energy futures even higher.

Now, the prospect of a perpetual climb in oil prices has become part of market psychology, which is notoriously hard to change. William H. Brown III, a former Wall Street energy analyst who now consults for hedge funds and financial institutions, says investors have become convinced that the White House and Congress are unlikely to do anything dramatic to bring down prices.

For example, a release of supplies from the Strategic Petroleum Reserve after disruptions in Nigeria or Venezuela might have persuaded the market that Washington was on the case and shaken some complacency out of the market. “I’ve been a little surprised at what has not been done or what has not been talked about to get a handle on the consumer situation,” Mr. Brown says.

Others say that although the push to blame market speculators rather than discuss economic realities is likely to intensify on Capitol Hill as the presidential election draws near, they believe that what the world is confronting is a momentous shift in energy supply and demand.

“Speculation and manipulation are two different things,” says Mr. O’Reilly of Chevron. “Most of where we are is because of fundamentals and concern about the future.”

Correction Appended

NORTH CANTON, Ohio — A simple change to the design of the gallon milk jug, adopted by Wal-Mart and Costco, seems made for the times. The jugs are cheaper to ship and better for the environment, the milk is fresher when it arrives in stores, and it costs less.

What’s not to like? Plenty, as it turns out.

The jugs have no real spout, and their unorthodox shape makes consumers feel like novices at the simple task of pouring a glass of milk.

“I hate it,” said Lisa DeHoff, a cafe owner shopping in a Sam’s Club here.

“It spills everywhere,” said Amy Wise, a homemaker.

“It’s very hard for kids to pour,” said Lee Morris, who was shopping for her grandchildren.

But retailers are undeterred by the prospect of upended bowls of Cheerios. The new jugs have many advantages from their point of view, and Sam’s Club intends to roll them out broadly, making them more prevalent.

The redesign of the gallon milk jug, experts say, is an example of the changes likely to play out in the American economy over the next two decades. In an era of soaring global demand and higher costs for energy and materials, virtually every aspect of the economy needs to be re-examined, they say, and many products must be redesigned for greater efficiency.

“This is a key strategy as a path forward,” said Anne Johnson, the director of the Sustainable Packaging Coalition, a project of the nonprofit group GreenBlue. “Re-examining, ‘What are the materials we are using? How are we using them? And where do they go ultimately?’ ”

Wal-Mart Stores is already moving down this path. But if the milk jug is any indication, some of the changes will take getting used to on the part of consumers. Many spill milk when first using the new jugs.

“When we brought in the new milk, we were asking for feedback,” said Heather Mayo, vice president for merchandising at Sam’s Club, a division of Wal-Mart. “And they’re saying, ‘Why’s it in a square jug? Why’s it different? I want the same milk. What happened to my old milk?’ ”

Mary Tilton tried to educate the public a few days ago as she stood at a Sam’s Club in North Canton, about 50 miles south of Cleveland, luring shoppers with chocolate chip cookies and milk as she showed them how to pour from the new jugs.

“Just tilt it slowly and pour slowly,” Ms. Tilton said to passing customers as she talked about the jugs’ environmental benefits and cost savings. Instead of picking up the jug, as most people tend to do, she kept it on a table and gently tipped it toward a cup.

Mike Compston, who owns a dairy in Yerington, Nev., described the pouring technique in a telephone interview as a “rock-and-pour instead of a lift-and-tip.”

Demonstrations are but one of several ways Sam’s Club is advocating the containers. Signs in the aisle laud their cost savings and “better fridge fit.”

And some customers have become converts.

“With the new refrigerators with the shelf in the door, these fit nice,” said April Buchanan, who was shopping at the Sam’s Club here. Others, even those who rue the day their tried-and-true jugs were replaced, praised the lower cost, from $2.18 to $2.58 a gallon. Sam’s Club said that was a savings of 10 to 20 cents a gallon compared with old jugs.

The new jug marks a sharp break with the way dairies and grocers have traditionally produced and stocked milk.

Early one recent morning, the creators and producers of the new tall rectangular jugs donned goggles and white coats to walk the noisy, chilly production lines at Superior Dairy in Canton, Ohio. It was founded in 1922 by a man who was forced to abandon the brandy business during Prohibition. Five generations of the founder’s family, the Soehnlens, have worked there.

Today, they bottle and ship two different ways. The old way is inefficient and labor-intensive, according to members of the family. The other day, a worker named Dennis Sickafoose was using a long hook to drag plastic crates loaded with jugs of milk onto a conveyor belt.

The crates are necessary because the shape of old-fashioned milk jugs prohibits stacking them atop one another. The crates take up a lot of room, they are unwieldy to move, and extra space must be left in delivery trucks to take empty ones back from stores to the dairy.

They also can be filthy. “Birds roost on them,” said Dan Soehnlen, president of Superior Dairy, which spun off a unit called Creative Edge to design and license new packaging of many kinds. He spoke while standing in pools of the soapy run-off from milk crates that had just been washed. About 100,000 gallons of water a day are used at his dairy clean the crates, Mr. Soehnlen said.

But with the new jugs, the milk crates are gone. Instead, a machine stacks the jugs, with cardboard sheets between layers. Then the entire pallet, four layers high, is shrink-wrapped and moved with a forklift.

The company estimates this kind of shipping has cut labor by half and water use by 60 to 70 percent. More gallons fit on a truck and in Sam’s Club coolers, and no empty crates need to be picked up, reducing trips to each Sam’s Club store to two a week, from five — a big fuel savings. Also, Sam’s Club can now store 224 gallons of milk in its coolers, in the same space that used to hold 80.

The whole operation is so much more efficient that milk coming out of a cow in the morning winds up at a Sam’s Club store by that afternoon, compared with several hours later or the next morning by the old method. “That’s our idea of fresh milk,” Greg Soehnlen, a vice president at Creative Edge, said.

Sam’s Club started using the boxy jugs in November, and they are now in 189 stores scattered around the country. They will appear soon in more Sam’s Club stores and perhaps in Wal-Marts.

The question now is whether customers will go along.

As Ms. Tilton gave her in-store demonstration the other day at the Sam’s Club here, customers stood around her, munching cookies and sipping milk. “Would you like to take some home today?” she asked.

A shopper named Jodi Kauffman gave the alien jugs a sidelong glance.

“Maybe,” she said.

The biggest landlord in New York City gets one of the biggest bills in New York City.

Every year, the city charges it about $200 million, for everything from water to trash pickup to police services. The bill for police protection is twofold: The landlord pays $18 million for basic police, fire and other municipal services, and an additional $65 million for specialized policing.

The landlord is not a wealthy private developer, but the New York City Housing Authority, the struggling agency that manages 343 public housing complexes that are home to 406,000 low-income and moderate-income residents.

The Housing Authority’s payments to the city have become the focus of new scrutiny in recent weeks, after the agency threatened to close hundreds of community centers, senior centers and resident programs to help close a $170 million budget gap.

Tenants, City Council members and advocates for public housing say the payments have contributed to the agency’s financial problems and reflect a double standard in the way the city treats the Housing Authority compared with its treatment of private landlords and other large agencies.

“These payments at these times are causing a financial drain to the Housing Authority,” said Councilwoman Rosie Mendez of Manhattan, the chairwoman of the Council’s Public Housing Subcommittee.

Last year, the payments to the city rose to $210 million from $208 million in 2006 and $197 million in 2005. The agency’s $170 million operating budget deficit this year, which is about 6 percent of its $2.8 billion budget, is projected to climb to $207 million in 2012.

The Housing Authority’s payments are the result of agreements the agency made with the city, some dating back a few years and others several decades.

Among the fees paid by the Housing Authority are payments in lieu of taxes, or Pilots, which the agency pays instead of property taxes. Last year, that payment, which the agency says covers basic police, fire and other municipal services, was $18 million. In addition, the authority pays for the New York City Police Department’s Housing Bureau, which patrols public housing developments in nine districts called Police Service Areas; last year, the agency paid $65.6 million. The authority pays the Department of Sanitation for an extra trash pickup each week at 30 developments that have no centralized garbage compound. That payment came to $842,000 last year. It also pays the city’s Department for the Aging to operate 101 senior centers in its buildings; last year that bill was $29.4 million. The agency started making that payment in 2003, after the Department for the Aging was faced with steep budget cuts.

A spokesman for the Council of Large Public Housing Authorities, a national nonprofit group, said that for the majority of such housing authorities in the United States, Pilots are waived by local governments, and they do not pay additional money for police services.

The Housing Authority, a state-chartered public benefit corporation, is one of the few such entities in the city with Pilots and police service fees. Two other large public benefit corporations — the Health and Hospitals Corporation, which administers the city’s 11 public hospitals, and the state’s Roosevelt Island Operating Corporation, which manages and develops Roosevelt Island — do not make either payment.

The Housing Authority began paying the city for police protection in 1995, when the housing police merged with the Police Department. The agency agreed to pay the city to provide a level of policing “over and above baseline services,” according to a September 1994 agreement. It describes those services as including vertical sweeps of buildings, bicycle patrols, narcotics enforcement and antigraffiti, elevator vandalism and administrative services.

Another police force that merged with the Police Department in 1995, the city’s Transit Police, created a Transit Bureau that patrols the subway system. Unlike the Housing Authority, however, the Metropolitan Transportation Authority does not pay the city for basic police services.

Jeremy Soffin, a spokesman for the Transportation Authority, said the city covered the cost of basic police services in the subway but billed the authority about $3.6 million annually for additional patrols, such as those to prevent fare abuse.

Last month, residents and public housing advocates packed a Council hearing on the Housing Authority’s payments. They called for the city to renegotiate its financial arrangements with the agency or to suspend some or all of the fees in light of the agency’s budget troubles.

“I don’t understand why the city of New York continues to take these payments from the Housing Authority knowing that they’re in a budget deficit,” said Reginald H. Bowman, 55, a resident of Seth Low Houses in Brownsville, Brooklyn, and the president of the Citywide Council of Presidents, made up of tenant association district leaders.

Douglas Apple, the Housing Authority’s general manager, said in an interview that the payments were not excessive and that one of the reasons the authority was often used as a national model for successful public housing was because of its relationship with city government.

“You cannot separate public housing somehow from the neighborhoods we are part of,” Mr. Apple said.

In some ways, the agreements between the Housing Authority and the city, which has been coping with its own budget cuts, have been beneficial for the agency. Its $18 million Pilots are far lower than the city’s estimate of what property taxes would be for the Housing Authority’s buildings: $130 million. And the city’s actual cost of providing police service is far higher than the agency’s payments. In 2003, for example, the city spent $117 million on policing Housing Authority developments, but received $88.1 million from the agency, according to the city’s Independent Budget Office.

“These payments are common practice in public housing across the country, and here in New York, they pay for only a small part of services received,” Evelyn Erskine, a spokeswoman for Mayor Michael R. Bloomberg, said in a statement.

The Police Department did not respond to a reporter’s inquiries last week.

The Housing Authority says its financial crisis is largely the result of inadequate federal aid and rising energy and labor expenses, though critics question whether poor management is also a factor. The authority has eliminated hundreds of jobs, raised the rents of its highest-income households, dipped into its reserves and postponed or cut dozens of capital projects to repair its aging buildings.

The agency receives the bulk of its money from subsidies from the federal Department of Housing and Urban Development. The agreements are partly an outgrowth of the city government’s view of the authority as a steady source of federal money it can tap into. But now, given tighter federal aid, housing advocates and several Council members say the authority’s payments for basic services are outdated and forcing the agency to reduce services to residents.

“It’s as if the city is still back in a time when N.Y.C.H.A. was flush with cash,” said David R. Jones, the president of the Community Service Society, a nonprofit antipoverty group that has been critical of the payments.

The 1994 agreement on police services between the authority and the city, for example, was based in part on the fact that the authority received money from the federal Drug Elimination Program. But the financing for the program, which provided the authority with $35 million annually for police services, was eliminated in 2002.

Tenants and Council members also argue that the city is charging the agency for services while failing to adequately contribute to public housing.

Of the Housing Authority’s 343 developments, 21 were built by the city and the state. But the agency receives virtually no federal or state financing for those complexes, which cost the authority $86 million to operate last year. And the city no longer regularly provides operating aid to the authority.

In 2006, the mayor and the Council provided the agency with a one-time allocation of $120 million. Last month, the mayor and the Council included $18 million for the agency in the city budget after Housing Authority officials announced the plan to shutter the centers and community programs. The $18 million falls short of the $76 million annual cost of running the centers and programs, and agency officials say they have not decided on their next step.

Since the police merger in 1995, violent crimes have fallen 44 percent at public housing developments, according to a 2004 Independent Budget Office report.

But many tenants say that violence and drug dealing remain major problems in a number of developments, and they wonder whether the authority has received its money’s worth in police services.

Mr. Bowman, of the Citywide Council of Presidents, sat one day last week on a bench outside the red-brick Seth Low Houses, a short walk from the Van Dyke Houses, where two women were raped in March, and the Langston Hughes Apartments, where a bullet went through an apartment window and wounded a 9-year-old girl the same month.

“I don’t see where it translates into more services,” he said.