The issue of energy and the systemic societal addiction to petroleum around the world is at the top of the list of important issues we now face.  It, more than any other current issue affects how the future of humanity will be written.  As stated in the ‘blog origins’ section of this site, I believe we are approaching a choice point that could determine how our history will be written 300 years from now.  In the decades ahead, humanity might well have the opportunity to begin to take the next major step in its evolutionary journey.  If that occurs, it will be in part due to a successful global handling of the impending energy crisis.  Let us take a look at where we are and what might happen.

Three Strikes and We’re Out

Most Americans, even if they are not baseball fans, understand what ‘three strikes and you re out’ means.  You get three chances.  Three chances to hit the ball, get on base, score a run, solve a problem, seize an opportunity.  Well, we now are facing our third strike.

The first strike was the OPEC oil embargo of 1973-74, when in the short span of three months the price of oil and gasoline increased four fold.  Oil went from $3 to almost $12 a barrel and gasoline went from $.30 to $1.20.  What was the response?  The Alaskan pipeline was approved, Americans frantically clamored for and then purchased smaller cars and the economies of Europe and the United States went into deep, prolonged and gut-wrenching recessions. We invented the word ’stagflation’ to describe our stagnant economies that suffered rampant inflation (remeber 18% mortgage rates in 1979?).  But no long term solutions to the increasing dependency on oil, and on foreign oil, were put into place.  We were all too entrenched into the status quo to shift.  It was only a pocket book issue, except for extreme environmentalists.

Strike two was 1981 when gasoline, measured in real dollars, peaked at more than $3 a gallon.  This was another slam to the pocketbook of consumers and a drag on an economy in recession.  Once again there was a lot of economic hand-wringing and many reactive policy conversations.  It took another almost 25 years until the price of gasoline at the pump reached this price, adjusted for inflation.  When the price receded, so did our discussion of long term energy solutions.

It is interesting to look at historical government data regarding gasoline use and passenger cars.  In 1950, on an annual basis, the average car in the US was driven 9,060 miles, consumed 603 gallons of gas and had an average mpg of 15.  In 1972, the full year prior to the oil embargo, the numbers were 10,171 miles, 754 gallons and 13.5 mpg(remember muscle cars?).  In 1975, the first full year after the embargo, usage was down, at 9,309 miles, 665 gallons and 14 mpg.  In 1982 when the price of gasoline subsided from its all time high, the numbers were 9,050, 535 and 16.9; usage down, consumption down, mpg up.  Then, every single year since then, mileage went up, gas consumption per car stayed about the same and mpg went up.  In 2003, when compared to 1982, mileage was up 35% at 12,242, gas per car was up 3% at 550 gallons and mpg was up 32% to 22.3.  The real problem is that the number of cars in the US quadrupled from 1950 to 2000.  This was not just due to population growth as measured by number of households, but also to the number of cars per household.  In 1960 the percentage of households that had 3 or more cars was 2.5%; in 2000 it was 18.3%, and there were many more households.  So, since strike one and strike two we have dramatically increased the number of cars and the amount of miles driven per car.  This has not been offset by a commensurate increase in mpg.  It is interesting to note that the mpg figures have barely moved in the last 15 years for autos.  The conclusion is obvious: as individuals we are driving a lot more and as a nation we lost our resolve to dramatically increase mpg.

Strike three is right now, the ball is heading toward the plate.  In the US gas is up over the 1981 $3 price per gallon and climbing, average mpg has flattened out, there is much more demand for petroleum around the world, supplies are at risk due to political and terrorist situations, and our government has only come up with election year grandstanding.  The President and Vice President are both former oil men, and so far, have only promised to seek out price gougers, the Democrats want to rescind the 18.4 cents per gallon federal tax and the Republicans want to give us each a $100 check before the fall elections.  Leadership?  Show me!

So, how do we prevent a strike-out?  Three areas: actions to take in the present, strategies to initiate for the future, and a necessary change in values and thinking.

The Present – All of the Above

Conservation through a conscious change in behavior, primarily in use of automobiles, public transport, carpooling, walking and biking:  yes!  A change in how we buy cars, buying only those with highest mpg ratings: yes!  Support for and growing utilization of ethanol, other mixed fuels and electric cars:  yes!  Legislation to drive a dramatic increase in mpg figures for all vehicles:  yes!  Accept as fact that we are at the historic global petroleum production peak right now and that, in the coming decade, demand will increasingly outstrip supply:  yes!  An absolute voter intolerence for any elected official that does not support the long-term goal of decreasing use of petroleum and finding viable alternative energy sources:  yes! 

The Future – Mobilization and Resolve

Mobilize the US through a government supported, entrepreneurially led ’space program (in the old 1960s meaning of the term) to decrease our use of petroleum by 50% in the next ten years.  This includes tax benefits for investments in alternative energy and technology that increases efficient use of petroleum, tax benefits for automotive manufacturers that deliver the highest mpg per vehicle class, tax deductions or credits for people who can document the purchase of high-mpg autos and alternative fuel technologies such as solar panels, and a massive information program on petroleum usage and conservation.

Create a completely open and unrestricted market place for energy innovation.  Allow and replicate the ‘Silicon Valley’ technology history of the past 30 years in the field of energy.  No restrictions that serve current vested interests of the status quo.

 

Change in Thinking and Values

Regarding energy, Americans need to change how they think about, and how they value the concepts of space and distance.  Space is increasingly expensive to heat or cool, and distance is increasingly expensive for travel and commuting.  The size of the average new house in the US has grown dramatically in the last three decades at the same time that energy costs have skyrocketed.  Is this smart? No. Is this self-indulgent? Yes.  Suburbia has given way to exurbia?  Is this intelligent planning when looked at through the filter of energy? No.  How far one is willing to travel in a daily commute should become a more important part of the analysis as to whether to take a job.  We must begin to think of space and distance as global citizens, as US citizens, not as indulgent individuals.

We need to look at the Internet and wireless technologies through the filter of how they can help us deal with this worsening energy crisis.  Frictionless, gasless commerce that every day becomes less place-based and more content and transaction driven.  Do we need more shopping malls or more band-width?  More highways or more communications backbone?

 

Optimism

I am ultimately optimistic about the long-term outcome here.  Our concerns about energy rise when the price of it dramatically rises.  As I wrote in an earlier post, I believe that it is very possible that gasoline could be over $7 a gallon in 2009.  What is the price threshold over which citizens will profoundly alter behavior and the country will become committed and strategic regarding energy policy?  I believe that threshold is somewhere between $5 and $10 a gallon.  We seem to need to be pushed, and we will be.

It is ultimately a matter of survival for all of us on Earth.  The economic riches that will come to those that create alternative and yet-to-be created energy sources is fabulously unlimited; it dwarfs any other financial opportunity today.  Survival and economic gain are two of the strongest drivers of human behavior.

There are going to be some rough, uncomfortable and expensive lessons ahead for us, until we re-chart our course.  The questions are:  how long will it take us to truly realize our survival is at stake and how much pain and social disruption must we endure until we come to that realization?

[a note of thanks to ace researcher Ben Meier for help with this posting.]

 

 

10 Responses to “Solving the Energy Crisis and Saving Ourselves”

  1. Jay Glickman Says:

    I completely agree with your position that Americans need to drastically alter their mindset and get out of the content and conceited sentiment about guzzling down as much energy as we need. However I think that while people will be able to mobilize more easily as the price of gas increases, our government won’t be able to adopt the necessary policies to chart a new course due to intense lobbying by the oil industry and basic political inertia. The New York Times Columnist Thomas Friedman writes quite frequently on this topic and noted the possibility for the need of a change in political and government organization (i.e. end to two party system) in order to address the problem.

  2. david Says:

    Possibly true. I think Friedman is one of the few people writing about the subject that sees it clearly.
    David

  3. Grant Says:

    Great post!

    It’s funny to hear people comment on this issue, as the fundamental principles are very simple. If you want the price to come down, quit using so much.

    In addition, artificially lowering demand or increasing supply doesn’t solve the long term problem.

    I have to wonder, if the price of gas comes down to, say $1.50, will we continue the drive to reduce our oil consumption? I doubt it.

    Is big oil gouging us at the pump? So what? The consumers reaction should be the same whether the price is legitimately high or otherwise: reduce consumption.

    Good thoughts.

    -Grant
    http://www.TheCornerOfficeBlog.com

  4. Richard Holcomb Says:

    Was it the President/CEO of EXXON that was on the “Today Show” yesterday saying there is plenty of oil and we won’t run out in our lifetime. That might be true but I don’t believe the mentioned what the price we pay at the pump will be for the luxury of not running out. Certainly if we could put a man on the moon with limited computer technology, we can find a way to eliminate the need for oil in automobiles, clean the air a little and make life easier. And, by the way, what is all this doing to the prices in Europe which have been nearly twice the price we pay?

  5. Mando Rousti Says:

    “A change in how we buy cars, buying only those with highest mpg ratings:” any other ideas from you david on how to achieve this, aside from tax breaks? on the tax breaks, are you familiar with how far prior or current legislation has progressed.

    Thanks for providing these ideas. I agree that this is one of the most pivotal issues of our time.

    Mando Rousti

  6. david Says:

    A lot of this comes down to mobilization and resolve. If the government
    -created an environment where it was patriotic to lessen our dependence on foreign oil,
    -promoted exactly how much a tax payer could save by buying a hybrid,
    -promoted tax benefits for conservation
    -promoted the use of Internet broadband for shopping
    -promoted the health benefits of walking and biking
    it would help a lot

    As far as the European situation, the mpg is much higher there, costs are also much higher, but the cultures are less car centric and distances are less and people walk more.

    Finally, the President of Exxon may be technically correct when speaking to someone over the age of 40. Current projections vary, but 2040 is a common projected end to plentiful oil, so the question is, what do we want to do for our children and our planet, in addition to our pocketbook?

  7. Steve Garrison Says:

    Corrupt dictatorships often rely on some source of revenue to prop up their regimes – and in many cases, that revenue is oil. Without petrol dollars we could potentially see the fall of some of these regimes.

    On a different note, instead of simply using tax breaks, I would suggest we simultaneously levy an incremental gas tax. And by Incremental I mean in the temporal sense. In other words, you institute a gas tax of, say, 5% in 2007, 10% in 2008, 15% in 2009, 20% in 2010, and so on. And put those revenues directly in as subsidies for clean oil alternatives. This would force companies to come up with alternative sources of energy very quickly.

    - Steve

  8. Henry Burnett Says:

    Alternative energy is not new; in the 1920s and 1930s a petroleum monopoly was carefully crafted. Oil was cheap and big oil muscled its way to dominate in transportation fuels after the 1930s. Rudolf Diesel designed the diesel engine in the 1890s, which could run on vegetable oil, including peanut oil. Henry Ford thought the ideal fuel for the Model T was alcohol. John Deere tractors were developed to run on a variety of fuels from kerosene to alcohol to gasoline—-an early flexi fuel vehicle. In the 1920s Farm Bureau Cooperatives developed portable Ethanol plants (Stills) mounted on trucks in a similar configuration to feed mills. The Farm Co-op would drive up to a farmer’s corn bin shovel his own corn into the Still and produce an Ethanol fuel right at the farm for his tractors, trucks and car. A strong lobby was mounted to outlaw these services since the same product that would fuel vehicles was also corn liquor. Prohibition and the big oil companies made this production of renewable fuel illegal.

    Energy policy and agriculture policy in the United States have not been linked until recently. The farm economy in the United States continues to be influenced by price stabilization policies developed in the wake of the Great Depression of the 1930s. The New Deal mitigated a collapsed rural economy and introduced modern scientific farming practices, soil conservation (remember the Dust Bowl), and economic stabilization or support of farm commodities: corn, wheat, milk, and a wide range of farm products.

    In 2006, 6.76 billion dollars in “fixed direct payments” will be made to farmers or farming corporations. These payments are made to farming operations to stabilize the farm economy and insure that the strategic nature of agriculture production continues in this country. Governmental policy is just now supporting the development of renewable fuel sources.

    Viewing energy policy, farm policy, and interventions in the Middle East from a single perspective is vitally important; but not reflected in national policy. Developing strong markets for agricultural products can be accomplished through developing environmentally friendly alternative fuels like Ethanol and BioDiesel. Farm subsidies could be reduced and eliminated through more intelligent linking of farm policy and energy policy. Renewable fuels hold the promise of reducing fuel costs to the consumer, strengthening the agriculture economy, and eliminating the need for military adventures in the Middle East.
    We need to look no farther that the national political scene to discover why these connections have not been made. The November mid term elections should be centered on energy policy and the economy.

  9. david Says:

    Henry-

    Thank you for such a thoughtful, historically based posting.

    You are absolutely right. As I look at the future and all the possibilities for humanity’s next evolutionary shift upward, I keep coming back to the fact that reliance on petroleum energy is the single largest impediment to it.

    One thing to keep in mind however, and that is that burning alternative fuels, is still ‘burning’. We must find a variety of ways to create energy. That being said, government subsidies and funding MUST look to the future and not just maintain rules, views and vested interests from the past.

    David

  10. Henry Burnett Says:

    David,

    You are right on target. I could not agree more. Every roof on every building in this country should have solar panels with photovoltaic elements producing electricity. There are so many alternatives that could be used. We have become complacent and locked into the current patterns, which are rapidly failing this nation. We need bold environmental and capitalistic leadership like a Teddy Roosevelt to move us to the future.

    Henry

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