May 3rd, 2006
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?
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.]