The trouble–the mammoth contradiction–is that higher prices have been conservation’s most effective sledgehammer. They forced us to behave as we say we should. Naturally, we tend to forget this. Writing last week in The Washington Post, former president Jimmy Carter argued that federal conservation measures (fuel-economy standards for cars and similar requirements for appliances) had suppressed America’s energy appetite. Well, up to a point. Remarkably, average energy consumption per person is now about the same as in 1973. New refrigerators are 70 percent more efficient than then; since 1974 new cars’ fuel efficiency has doubled, from 14 to 28 miles per gallon.
But only up to a point. Even with these savings, overall energy use is up about 30 percent: a reflection of population growth. And what Carter neglected to say is that the biggest energy savings occurred in the late 1970s and early 1980s, when skyrocketing prices, gasoline lines and recession caused Americans to become energy-conscious. High energy prices shut down the most inefficient factories. Drivers turned–temporarily–to smaller cars. In 1983 the country actually used less energy than in 1973. Once oil prices collapsed in 1986, energy demand resumed a steady upward march. Drivers began switching to SUVs and pickups, which are covered by much laxer fuel standards than cars.
What unites Bush and his critics is an unwillingness to confront the contradiction. To Bush’s critics, conservation is an almost painless process that spares us harder choices. For Bush, ample supplies are the answer. Some simple arithmetic suggests neither may be right. Focus on a single number: 337 million. That’s the Census Bureau’s estimate of the population in 2025, which is about 53 million more people and almost 20 percent greater than today. It means more homes, cars, schools, office buildings and computers: more of everything that gulps energy. Just to accommodate population growth–forget about higher per-person energy use for, say, broadband Internet–would require a 20 percent increase in energy supplies.
Bush would encourage added supplies in many ways. He would permit oil drilling in the Arctic National Wildlife Refuge (ANWR)–an area estimated to have between 5.7 billion and 16 billion barrels of reserves that, if tapped, might satisfy about 5 percent of today’s daily oil use. He would also create a federal right of eminent domain for power-transmission lines, so electricity could move more easily from surplus to scarcity areas. And he would streamline some complex regulations–mostly from the Clean Air Act–that the oil and electric industries contend have inhibited expansion of refineries and power plants. After last year’s run-up in Midwest gasoline prices, disgruntled members of Congress asked the Federal Trade Commission to investigate for a possible conspiracy among oil companies. But the FTC report essentially corroborated the industry’s claims: high prices reflected tight refining capacity and the practical problems of making so many gasoline blends to comply with clean-air requirements.
“We haven’t asked for a rollback in environmental regulation,” says Red Cavaney, president of the American Petroleum Institute. But companies, he says, need stability in regulations so that, once an investment is made, it won’t quickly be outmoded by a new regulation. “[We need] a road map: can I make this investment and get it back?”
The road map may be hard to get. Democrats relish portraying Bush and Vice President Dick Cheney–both of whom worked in the oil industry–as the lackeys of energy companies. Many major proposals (drilling in the ANWR, eminent domain for power lines) require congressional approval and face ferocious opposition from environmentalists and others. Another political problem is that Bush’s plan offers no immediate relief for higher gasoline prices or California’s electricity shortages. Just last week the North American Electric Reliability Council predicted that Californians would experience about 15 hours a week of blackouts this summer.
What do Bush’s Democratic opponents offer? Generally, tougher energy standards and conservation tax breaks. One proposal involves up to a $4,000 credit–essentially a tax cut–for buying energy-efficient appliances, cars and homes. (Democrats gave neither the total cost nor details of how homes, vehicles and appliances might qualify. Bush’s plan has a smaller tax credit for “hybrid” cars that have combined gasoline-and-electric engines.) Any congressional legislation might also include an increase in fuel-economy standards for auto-makers. These are now 27.5 miles per gallon for cars and 20.7mpg for light trucks, which includes SUVs. Howard Geller of the American Council for an Energy-Efficient Economy suggests these be raised to 44mpg and 33mpg, respectively, by 2012. Of course, these measures–even if enacted–wouldn’t have much immediate effect either. Most people don’t buy new homes or new cars most of the time.
America’s energy problems are partially self-correcting. Higher prices have already induced extra drilling for oil and natural gas, and even in California, new power plants are being built. But “energy policy” is not a hollow phrase. It recognizes that, more than in most industries, government sets ground rules in an effort to reconcile the nation’s energy appetite and its environmental agenda. “The thing that should be there is a tax,” says Philip K. Verleger Jr., a prominent energy economist. Indeed, many economists believe that higher energy taxes would ease, though not eliminate, the tension between protecting the environment and expanding energy supplies. A tax would discourage demand and create a strong-er market for energy-efficient products–including new products that, by definition, won’t be covered by energy standards. In the late 1970s, hardly anyone foresaw the boom in personal computers and the Internet.
But Bush shuns a tax, and even vocal critics agree. “It makes sense, but it’s a nonstarter politically,” says Geller. “Americans think they have a God-given right to cheap energy.” There, in a nutshell, is the great collision. Provide us cheap energy, but–somehow–prevent us from using too much. There’s no guarantee that Congress and the president can resolve the conflict. But if they can’t, it may ultimately resolve itself. If demand isn’t suppressed or supply expanded, then prices will rise or scarcities will result. This is something close to an iron law that, having wreaked havoc in California, might someday do the same to the nation.
