The Energy Emergency

James Canton, President of the Institute for Global Futures, wrote a book I'm reading titled "The Extreme Future". Canton is no hack - he's built a long term profitable business "predicting" the future for major companies and government. His analyses are based on matching facts about current circumstances with variables like growth rates, technology research, and social movements. His predictions cover energy, technology innovation, the workforce, medicine, climate, culture, international affairs, and privacy concerns, and some of them seem pretty wild. But then again, few people in 1977 would have believed a world with ubiquitous computers, heart catheterization, and free long distance calls.

One of Canton's predictions is that the world will run out of oil much faster than most of us would believe. The implications of this future shortage include $300/barrel prices and the need for entirely new sources of energy in my lifetime, and I'm 62 for a few more months. He's got my attention, and fortunately he offers hope that the world's future energy requirements may be met by new and amazing technology, like nanotech. But that's not what I want to discuss right now.

Canton's picture of how the U.S. fits into the world of oil is sobering. We consume about 20 million barrels of oil each day, 12 million of which are imported. At the current price of $64/barrel, that's $768 million spent every day on imported oil. We consume as much oil as Japan and China combined, and 11% of global oil production is devoted to fueling cars and trucks in the United States. Our oil reserves are only about 3% of the world's reserves, and the oil in the Arctic National Wildlife Reserve would increase that by only a fraction of 1%. In other words, we are oil gluttons and we have little oil of our own. Our entire economy depends on obtaining increasingly expensive oil from countries who may or may not wish to sell it to us.

In the face of these simple but scary facts, our government is disturbingly quiet about its plans for ensuring we will have enough energy for future needs or, potentially, short term needs during an international crisis. Our president talks about replacing 20% of our gasoline use with ethanol within 10 years, which some experts believe is a very optimistic proposal. But the real problem with this plan is that it is grossly inadequate in terms of its overall impact on U.S. oil imports. The ethanol solution leaves us incredibly dependent on foreign sources and does nothing to curb the consumption that will grow inexorably as our population grows.

Why is the U.S. government not laying out the whole simple truth for us, and why is the government not doing more to ensure we will have the energy we need in the future? It's not that there is nothing we can do. Europe and Japan are far ahead of the U.S. in nuclear power and alternative power production as a percent of total usage, and their high taxes on oil promote conservation. We just continue to buy SUV's, fill them with cheap $2.80/gallon gas, and sit in traffic jams waiting to get back home to our overly large, energy-inefficient abodes. And our government smiles on this behavior - why?

One argument for keeping the status quo on U.S. energy policy is that so much of our economy depends on heavy use of oil. Our car factories build large, expensive, heavy cars, and we have an enormous infrastructure that supports the sale, service, and fueling of these vehicles. Increasing the mileage of our vehicles or taxing oil more heavily will slow down the employment and profits of this infrastructure, and perhaps slow our economy. The losers would clearly be some of the very powerful players in industrial America - autos and oil. And, of course, the average American would not happily downsize into slower, more efficient vehicles or smaller, more efficient homes. Big corporations and many individuals love the status quo, and this is the constituency our government is more than willing to placate.

Canton is blunt about where the current policy has got us. He says, "This era (of cheap oil) is over, and Americans are ill-prepared to meet the challenges of either an energy-restricted future, characterized by slow growth, or one in which expensive energy curbs business productivity and national GDP growth. Everyone will need to face the stark realities of an energy-restricted and costly future. The time to have acted was ten to twenty years ago. Now the world will have to play catch-up, especially America."

Leadership is all about managing the "big issues". The Bush administration, filled with incompetent political hacks and reactionaries, has managed none of these issues during the past six years. Not entitlements, not education, not immigration, not climate change, and, perhaps most embarassingly, not energy during a period when virtually every knowledgeable person sees the end of cheap energy just over the horizon. Even minimal CAFE increases were too risky for our president to spend his "political capital" on. History will not be kind to George Bush, but cursing him will provide little solace for our children.